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fib_1618

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So with the BETS showing no change this week with a -55 reading, general market conditions remain weighted toward continued price decay. With our first downside target for the Dow Industrials of 17,100 being all but met on Wednesday's intraday sharp decline (17,126), we still have many outstanding downside price projections that still need to be met (or cancelled) before we can call the current pattern sequence complete. Because of this, and the ongoing action of money flow over the last 3 weeks, let's continue to look for choppy, volatile behavior overall until one side decides that "enough is enough of this going nowhere fast" and the market finally breaks out of its summer doldrums.

And quite a break it turned out to be as the major market indices seemingly played "catch up" to the 4 month declining trend of money flow and wound up on the Friday with an average loss of 5.55%, the largest such weekly decline since 2011 which included declines of 8.18% the week of August 1st, a 5.48% shaving during OPEX week of August 15, and a final capitulation of 7.09% the week of September 19th that finished off that summer's correctional sequence.

Looking over our breadth charts array for this week shows that prices in both the S&P 500 and the NASDAQ Composite Indexes broke decidedly below their intermediate term rising bottoms lines that go back to January of this year. There was also a definitive breakdown in France's CAC Index as well. Breadth wise, we continue to see a predominate trend of lower highs and lower lows in many of the stock equity advance/decline lines as their declining trendlines from April maintain control of their directional patterns. The lone exception to this comes with the NYSE Preferred advance/decline line which continues to support a series of rising bottoms within this same time period.

Over in the interest rate sensitive area of market trading, the High Yield advance/decline line continues to accelerate to the downside showing that ample sources of liquidity remains a problem at the current time. Looking over at the NYSE Bond CEF advance/decline line, and we see that there was a slight break below the short term rising trendline on Friday as the yield on the 10 year note also broke below trendline support of its own at the 2.10% level just the day before. This then is showing a rare dichotomy in this relationship where money would generally be moving into the NYSE Bond CEF's to support a trend of lower interest rates. True, this could be only a temporary situation as money makes a hurried defensive move into treasuries after the last two days of equity fallout, but we'll have to watch this breadth to rate relationship over the next week to know for sure, and by extension, what traders are really thinking as we move closer to both the September and October FED meetings.

Over in the precious metals complex, the short covering rally continued this past week as the Precious Metals advance/decline line is now up its intermediate term declining tops line that has been controlling the pattern since April, while the price of gold has also reached this same line of negative influence. On what can be construed as a positive note though, the 16 stock "high cap"
components that makes up the XAU advance/decline line has already moved above this same area of pattern resistance. This broader strength in the "generals" could be an indication that the major part of the sell off in the precious metals is likely behind us. However, with gold closing the week right at its 50% retracement level of measurement of the May to August decline ($1158), and silver's lack of showing any kind of strength in this reflexive bounce, the expectation for next week is for this asset class to begin to pull back in what is likely to be the start of gold's final journey to our longer term price target of $985.

So with the equity markets finally giving into the inevitable that was forecasted by the ongoing weakness we've seen in money flow over the last several months, our downside price targets for the Dow and SPX from July 24th now met, and the NYSE (3.12), NASDAQ (2.27) and Total Market (2.06) TRIN's all closing on Friday below 2.00, we are now getting "oversold" enough to where we've seen important longer term price bottoms occur over the last 5 years. That said, however, there was quite a bit of technical damage internally on Thursday and into Friday that will take some additional time to sort out before we'll likely see the actual tradable price low. Because of this, let's now extend the timeline out to around the first week of October as our next likely bottoming event, while in the meantime, we'll continue to see a highly volatile and choppy pattern sequence for next week as the market attempts to find its sea legs and begins to, once again, construct a newer and more firmer market foundation from which an advancing price sequence can actually begin.

Have a great trading week!

US Equity Markets:

[breadthspx082115]


[breadthdjia082115]

[breadthspec082115]

[breadthpre082115]

US Interest Rates:

[breadthtnx082115]

[breadthhigh082115] 

US Real Estate:

[breadthreit082115]

Precious Metals:

[breadthpm082115]

[breadthxau082115]

Australia:

[breadthaus082115]

England:

[breadthftse082115]

France:

[breadthcac082115]

Germany:

[breadthdax082115]

India:

[breadthbse082115]


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