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fib_1618

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So it was a good character week for the bulls as many of the breadth and volume McClellan Oscillators moved to multi month highs, but the lack of total commitment by the Mid Caps and Small Caps suggest that some backing and filling will be needed before a more robust advance above the price highs of May and June are seen. Even the BETS is giving a cautionary signal as it came in with a -25 reading on Friday indicating that overall market breadth in the US and Canada remains negative at this time. Because of this, let's expect the choppy and volatile price action of the last couple of weeks to continue as market goes about the effort of backing and filling a proper foundation from where prices will be able to not only rally, but will also be able to maintain an advancing price structure without the fear of collapse. 

Last week's lack of upside confirmation by the NYSE Common Only and NYSE REIT advance/decline lines proved to be quite instructive for traders as the major market indices tried their best to follow through on Monday before moving sharply lower for the rest of week. By the time Friday rolled around, the major market indices found themselves down by an average of 2.48%, week over week, with the sell off all encompassing with very few escaping the "gravitational pull" of the bear market default.

The importance and veracity of the decline wasn't lost on this week's breadth charts as the NYSE Composite, NYSE Common Only and NYSE Specialty advance/decline lines were all sharply lower while taking out their pattern lows of July 8th, and with it, the divergent lows we saw that same day on the breadth McClellan Oscillators. These new lows now reset the pattern sequence and suggests that the larger corrective sequence will continue through much of the month of August. The sell off also extended to all of the European indices, as well as, the Australian markets down under as the breadth non confirmations of last week pulled prices back sharply in an attempt to reset their structures into a more conducive breadth to price relationship. The lone exception to this was again found in the BSE advance/decline line which held up nicely in the face of the global sell off as it still remains under the influence of its accelerated rising bottoms line from its June lows. Here in the states, the NYSE Bond CEF and NYSE Preferred advance/decline lines also remained buoyant as well in what continues to look like money moving into areas of perceived safe havens while waiting for more information.

Looking at the precious metals and they also had a turbulent week as well as the price of gold was down by another 3% and meeting our first downside price target of $1100 with a weekly settlement of $1098.40. Given the "oversold" nature of the complex in general, and this week's mid range closes in both gold and silver, it once again wouldn't be too surprising to see some stability move into this area of the market on a short term basis. But as also we learned from last week, the ongoing breakdown in the Precious Metals and XAU advance/decline lines continue to suggest that we have further price weakness still ahead toward the $985 target price for gold. In any event, we still remain defensive toward this investment class in general, with any sharp reflex rallies to be short lived and rich in positive sentiment.

So with a triple top rally failure in the S&P 500 now behind us, along with many of the breadth McClellan Summation Indexes rolling over in and around their zero lines, as well as, the BETS moving to its lowest levels since November 25, 2011 with a -60 reading, the minimal downside expectation is for a full on challenge of the December 2014 lows at the 1980 price level in the SPX and 17,100 in the Dow Industrials. At this point, though, it's still a bit too early to tell if these important levels will be contained or not, but it's far better to be defensive toward equities for the time being and wait for further information in order to get a better feel on what could take place as we approach the infamous September/October period.

Have a great trading week!

US Equity Markets:

[breadthspx072415]


[breadthdjia072415]

[breadthspec072415]

[breadthpre072415]

US Interest Rates:

[breadthtnx072415]

US Real Estate:

[breadthreit072415]

Precious Metals:

[breadthpm072415]

[breadthxau072415]

Australia:

[breadthaus072415]

England:

[breadthftse072415]

France:

[breadthcac072415]

Germany:

[breadthdax072415]

India:

[breadthbse072415]

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