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With many momentum indicators continuing to show negative structures in their intermediate term patterns, let's go ahead and maintain our fully defensive posture toward all equity related investments for the time being, and we'll see how all of this will sort out next week as we head into this month's quarterly OPEX period that's due the day of the next FED policy announcement at the end of week of the 14th.
Well...another week has come and gone and the equity markets finished up by extending their amazing streak of alternating closes to ten straight weeks as the major market indices closed up by an average of 2.05% from last Friday's close, with the NASDAQ Composite Index leading the field with a gain of 2.96%, while the Small Caps brought up the rear with an average gain of 1.69%. Looking over the breadth charts array for this week shows that there was very little in the way of week to week changes from last Friday's settlement as the market's participants continue to wrestle with their indecision of what the next major move might be with prices moving forward. Over in the interest rate sensitive NYSE Preferred and NYSE Bond CEF advance/decline lines, they too saw very little or no progress as well, but unlike everything else, they continue to support patterns of rising bottoms as money continues to take a more defensive approach as we move into next weeks Federal Reserve meeting and statement which is due on Thursday...the same day in which futures and options expirations begin for the 3rd quarter of 2015. Taking a view toward the Precious Metals and XAU advance/decline lines and we see that money continues to move out of these issues to where new all time cumulative lows were seen mid week. With the High Yield advance/decline line also showing little in the way of buying interest for the last couple of months, along with the overnight Fed Funds rate above the target of 1/4%, the markets continue to anticipate FED tightening this week to hold true to their previous conditional promises to do so of the last several years. Whether it will be the Discount Rate (currently at 3/4%) or the Fed Funds Rate (currently at .15%), or both, is still yet to be determined. But given that the market is a discounting mechanism, the directional trigger for prices will probably be fully based on the statement itself of the FED's intentions for the rest of the year. So with the days, weeks, months and even years of waiting for the FED to begin to tighten the cost of money seemingly coming to an end, the market's overall condition remains on the heavy side with this week's BETS number of -65 still in a "sell" environmental condition for the second straight week. With many symmetrical and right angle triangle configurations being noted throughout the market complex at this time, a large extended move out of these coiling indecision patterns is now to be expected sooner than later. Given the weight of evidence we have to work with, the expectation is for a downside resolution in prices with a initial target as low as 1860 on the cash SPX. Once this objective is out of the way, the timing should be at or near our long anticipated opportunity of a tradable bottom sometime at the beginning of October. In any event, this remains a scalpers (day traders) market, with prices and volatility likely to remain quite erratic for another several weeks. 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