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fib_1618

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So with the BETS continuing to improve again this week to a reading of +45 in spite of losing both the NAAD and NAUD cumulative lines from their bullish configurations, the global markets remain friendly, though a substantive case can be made that we're also over extended both internally and time wise where a corrective sequence wouldn't be surprising to relieve this same analytical imbalance. With that said, however, global liquidity and monetary flows into the interest rate sensitive issues remains quite ample, and because of this, this same pause to refresh is likely to be contained by sharp and short shake outs while maintaining the rising path of least resistance.

The market pretty much followed the outlook laid out last week by being down from Tuesday through Thursday, while being sandwiched by rally's on Monday and Friday, and we finished the week down by an average of only .70% from last weeks closing numbers, with the New York Composite Index taking the biggest draw down by 1.23%.

Looking over our usual series of cumulative money flow charts this week shows that the interest rate sensitive issues continue to attract investment capital as the NYSE Preferred, NYSE Bond CEF and NYSE REIT advance/decline lines all finished at new all time highs, while the Investment Grade Bond advance/decline line is now back to its 3 year declining tops line going back its all time highs that were last seen in October of 2012. Meanwhile, the NYSE Composite, NYSE Common Only, NYSE Specialty CEF and Junk Bonds advance/decline lines all saw slight breaks of their accelerated rising bottoms lines which provided the backdrop for this past weeks corrective sequence. These trendline breaks, however, seem to be part of the longer term texture of the advancing cumulative sequence itself just as long as the interest rate sensitive issues continue to keep their promise (by making higher highs) that we will see higher equity prices in the not too distant future.

Over in the metals complex, the Precious Metals advance/decline line took a breather but found technical support at its intermediate term rising bottoms line going back to its January lows, while the XAU advance/decline line broke this same trendline before abruptly turning around on Thursday and Friday to closing right on it. Because of this ongoing strength in the metals, it's not that surprising then that the Aussie advance/decline line continues to trace out a rising pattern of higher highs as it enjoys a new found interest in earth commodities in general, and at the same time, this same interest in commodity prices continues to buoy the Bombay advance/decline line as the cost factor to manufacture products in the sub continent from these raw product resources remains profitable. Finally, we see that the markets in Europe are mixed now with the FTSE advance/decline line showing the most amount of negative pressure in its structure, while the DAX advance/decline line remains positive, and the CAC advance/decline line is lying somewhere in between the two.

So, all in all, the markets took a well deserved rest from their strong advances of the last couple of months to close nearly unchanged once the dust settled on Friday. The BETS itself saw no changes this week with a +45 reading (accumulate with a bullish bias), and as long as we continue to see this kind of buoyancy in this indicator, this would suggest that the current corrective process is not likely to last more than a couple of weeks at the most. With many of the breadth and volume McClellan Oscillators seeing solid "oversold" readings on Thursday, and the NYSE TRIN seeing a reading of 1.98 on Tuesday, the expectation for next week is for the markets to continue to firm as we see the MCO's snapback to or toward their zero lines. After that we should see another quick pullback which will probably time itself to completion in and around this month's OPEX which is due on May 20th. Once that's out of the way, the prospect is that the rest of May through the beginning of June should be a positive one for equity investment.

We'll see how it goes.

Have a great trading week!

US Equity Markets:

[breadthspx050616]


[breadthdjia050616]

[breadthspec050616]

[breadthpre050616]

US Interest Rates:

[breadthtnx050616]

[breadthig050616]

[breadthjunk050616]

US Real Estate:

[breadthreit050616]

Precious Metals:

[breadthpm050616]

[breadthxau050616]

Australia:

[breadthaus050616]

England:

[breadthftse050616]

France:

[breadthcac050616]

Germany:

[breadthdax050616]

India:

[breadthbse050616]

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