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Given that we're out of sync currently between many of the McClellan Oscillator's and their components, along with the ongoing heaviness in the NASDAQ issues, the expectation for next week is for choppy, volatile behavior as both sides begin the familiar dance of who is going to take control of the action.
It was another "bookend" week of trading with up days on Monday and Friday offset by the market averages being lower on Tuesday, Wednesday and Thursday. But unlike the previous Friday, the market closed up for the first time in four weeks by an average of .43%, with leadership this time coming from the NASDAQ Composite Index of issues as it wound up with a gain of 1.10%. Looking over our breadth charts array for this week and we see that we had a mixed picture with many of the advance/decline lines breaking to lower lows from the previous weeks action but recovering nicely from this slip and fall on Friday. Special recognition comes with interest rate sensitive issues as the NYSE Bond CEF, NYSE REIT and the Investment Grade advance/decline lines all broke below their accelerated rising bottoms lines that go back to their February lows. We saw this same broader market weakness translate into the NYSE Composite McClellan Oscillator as it also broke to its lowest levels since the early part of this year. On a positive note, however, the short term trend of volume plurality (as measured by the volume MCO's) provided bullish divergence structures with Thursday's sell off. This divergence between breadth and volume indicated that we were likely near some sort of price bottom and this helped in Friday being a positive day. With both the NASDAQ and NDX volume MCO's now showing constructive patterns of bottoms above bottoms in place, and with the other volume MCO's that we follow in the chat room supporting complex bottoming action, this would indicate that we've probably seen our orthodox (technical) price bottoms for now, and we should begin the process of building our next internal foundation from where prices will be able to rally later on. Looking at the precious metals markets and we see that the XAU advance/decline line continues to make higher highs as the XAU index itself bounced off support of its intermediate term rising bottoms line on Friday. The Precious Metals advance/decline line is also riding support of its intermediate term rising bottoms line as well though it failed to make new highs by only 4 net advancing issues. With the price of gold within the guidelines of completing a minimal snap back to or toward the apex of its previous symmetrical triangle pattern now probable, along with a pick up in bearish sentiment for the metals this past week, the expectation is for a re-initiation the larger rally in gold to begin sooner than later. Any close then above the $1305 level would then clear the way for a move to our next price target of around $1400. Looking overseas and we see that all of the foreign markets we cover continue to be buoyed by their money flow patterns, and compared with their respected price patterns, bullish non confirmations are now evident. With the American market now seemingly to have run out of sellers on Thursday, and with the internal action in precious metals promising, we could see a return to better buying patterns and higher price highs over the next couple of weeks in all of the global markets. So with the BETS moving as far as it can without going to cash with a +25 reading on Friday, the market internals look to have "hammered" out a price low for now. That said, we still don't have universal confirmation of this as many of the breadth McClellan Oscillators have yet to move above their blip resistance levels, no less, their zero lines. Once we do have this confirmation in our back pocket, however, we can then go about the business of giving a preferred time window to when all of the willing and unwilling sellers will likely be put behind us, and with that done, our next challenge of the all time price highs in many of the major market indices that we cover will begin. 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