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However, with the lack of uniformity in seeing all of the breadth and volume MCO's moving to new highs on Friday, we remain in a correctional sequence that will continue to see choppy, volatile behavior for the upcoming week.
Stocks continued their latest imitation of a drunken sailor in a bar room brawl as the major market indices closed down by an average of 3.25% from last Friday's high point, with the NASDAQ Composite Index getting coldcocked with a loss of 5.44%, while it's buddy in arms, the NASDAQ 100, seeing stars of its own with a loss of nearly 6%. Taking our weekly review of the breadth charts array shows that the big winners were in the precious metals asset class as the price of gold broke above its accelerated declining tops line as it rocketed higher by 4.98%, while the price of silver showed a nice gain of its own of 5.44%. The biggest winner of these gains, or course, were seen in the Precious Metals and XAU advance/decline lines as equity issues had their best gains since the 1st week of September 2012. In fact, the triple bullish ETF, NUGT, gained nearly 68% for the week as the gold shorts sprinted to cover their bearish positions. With the latest round market statistics showing more and more proof of a severe economic slowdown in progress, along with our longer term downside price targets for gold being reached last year, it would appear that our current buy signal that was posted on December 27th has the all of the ingredients of a confirmed, longer term, rounding bottom formation that should lead to a multi month advance in prices. For now, the expectation is for gold to continue to rally further during this current sequence, with the short term objective of reaching the $1220 level sometime this month. As one would expect with such poor economic statistics, yields in both U.S. Treasury Notes and Bonds continued their collapse from their year end high points and now find themselves back to levels not seen since the spring of last year. When looking at a daily U.S. Dollar chart, and we also see that it has the classic look of a double top structure going for it, with any break below the 93.00 level forecasting a downside target of around 82.00. This, of course, would likely be a bullish blueprint for the precious metals to build on unless we have major deflationary forces at work here as the CRB index continues to suggest. Quite a bit to digest, to be sure, with the next month or two likely to have a turbulent tone to it as global traders wrestle with this same information. Looking at the equity markets themselves and we see that last weeks price declines were not confirmed by several measures with the NYSE Composite advance/decline line showing a higher low compared to what was seen on February 2nd and the NYSE Common Only advance/decline line a lower low in this same chart comparison. Overall though, Friday's shake out showed a lessening of selling pressure, momentum wise, compared to that of the early January period. This is a good indication that we might be getting near a tradable low sometime later this month, but it's a bit too early to know for sure with things happening as quickly as they are. So with the cumulative charts that make up the BETS now showing a bit of buoyancy in their structures, we might be getting close to a tradable low in the next couple of weeks. However, market forces currently remain highly volatile and chaotic, so we must continue to be on guard to further price decay in order for the market to provide more uniformed divergences between breadth and price from where a more solid foundational low can then be created. Because of this, let's look for the likelihood of a price capitulation sequence to drive sentiment to new lows in the next week or two, while at the same time, focusing on both the breadth and volume McClellan Oscillators as they attempt to hold above the lows seen in mid January. Have a great trading week! US Equity Markets : US Interest Rates : US Real Estate : Precious Metals: Australia: England: France: Germany: India: __________________ Dave's LinkedIn Profile Technical Watch Twitter Page Technical Watch Facebook Page "As for it being different this time, it is different every time. The question is in what way, and to what extent" - Tom McClellan "An economist is someone who sees something happen, and then wonders if it would work in theory" - Ronald Reagan "What we see depends mainly on what we look for" - John Lubbock "The eye sees only what the mind is ready to comprehend" - Henri Bergson “Answers are easy; it’s asking the right questions which is hard” - Dr. Who - 1977 "You know the very powerful and the very stupid have one thing in common - they don't alter their views to fit the facts, they alter the facts to fit their views (which can be uncomfortable if you happen to be one of the facts that needs altering)" - Dr. Who - 1977