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fib_1618

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Reply with quote  #1 
Please note that the time axis has been adjusted this week to provide better analytical insight moving forward.

Quote:
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.

Having received our internal confirmation in the middle of the week that an important price bottom was indeed "hammered" out the week before, the major market indices had their best week since the week ending April 15th with an average gain of +2.69% from last Friday's closing numbers, with the NASDAQ Composite again leading the market higher with a gain of another 3.44%, while the S&P 400 Mid Cap index closed at new recovery highs on a weekly basis and is now less than 50 points away from its all time highs.

Looking over our breadth charts array for this week shows that the interest rate sensitive issues continue to attract large amounts of investment capital as the NYSE Bond CEF and Preferred Stock advance/decline lines again closed at new all time highs, while the NYSE Specialty CEF (-150) and NYSE REIT (-26) advance/decline lines wound up within striking distance from making it a foursome. This combined strength within the debt class was able to push the broader based NYSE Composite advance/decline line into new all time high territory as well, with the Junk Bond advance/decline line matching its recovery cumulative highs of May 2nd. Taken together, current money flow data not only continues to support higher equity prices as we move into the month of June, but it's also saying, loud and clear, that the odds of any FED tightening during this time is a very low probability.

Moving to the precious metals complex and we see that although the price of gold has moved beyond the reasonable technical expectation of a simple snapback to the apex of the symmetrical triangle pattern from last month, both the Precious Metals and XAU advance/decline lines showed very little in the way of cumulative selling during this process. This would suggest a "rogue wave" is in progress which are usually generated by an abnormal occurrence such as large player putting their thumb on the scale to generate cash (Venezuela?). But whatever the underlying reason might turn out to be, cumulative money flow is indicating that current prices in both gold and silver are at wholesale levels, and once this period of indigestion has passed, the expectation for June is for a hard upside reversal to take place to fill the vacuum created by this same non confirmation between breadth and price.

Looking overseas and we see that money flow patterns remained firm in both the Australian and Bombay advance/decline lines, while over in Europe, the CAC, DAX and FTSE advance/decline lines saw strong inflows of capital coming off of last week's bullish divergent structures. Although positive overall, we also see that the buyers are still in need of some additional follow through before there is enough energy/momentum to create (and carry) an advancing trending structure in all five of these global marketplaces. However, given the continuing internal strength we're seeing in the US markets over the last couple of weeks in the debt area, let's continue to look toward better total returns for the longs, in a great majority of the global markets, over the next several weeks.

So with the BETS moving sharply higher this week to a reading of +60, it would seem that the equity markets have found a new lease on life now that the May OPEX period is behind us. With the interest rate sensitive issues continuing to maintain their pattern structures of higher highs, this also promises us higher equity prices in the not too distant future as the cost of investment capital remains at historic lows. With many traders looking toward the jobs data next week as a recommended proxy with respect to domestic economic strength (or the lack there of), it would seem that next weeks numbers should set the tone toward what we're likely to expect for the month of June as a whole. Because of this, let's continue to trade on the friendly path of least resistance until we start to see evidence to the contrary, but at the same time, it wouldn't be too surprising to see a bear pop out from behind a tree early in the week just to keep the majority guessing as to whether this same road is safe enough to travel.

Have a great trading week!

US Equity Markets:

[breadthspx052716]


[breadthdjia052716]

[breadthspec052716]

[breadthpre052716]

US Interest Rates:

[breadthtnx052716]

[breadthig052716]

[breadthjunk052716]

US Real Estate:

[breadthreit052716]

Precious Metals:

[breadthpm052716]

[breadthxau052716]

Australia:

[breadthaus052716]

England:

[breadthftse052716]

France:

[breadthcac052716]

Germany:

[breadthdax052716]

India:

[breadthbse052716]

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