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fib_1618

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So with the markets in a state of flux and waiting for some trading clarity, along with the BETS now maintaining a fully defensive posture for the longs, and quarterly quadruple witching coming next Friday, let's look for a choppy, sideways marketplace next week as both sides continue to battle it out for short term control overall.

And a battle it was as it turned out to be in a tale of two markets as the large caps moved to new all time highs while the lower capitalization issues were flat to lower. But once we finally got quarterly OPEX out of the way, the major market indices gained an average of .47%, week over week, with the Dow Industrials leading the bullish charge with a 1.72% gain while the Small Caps were down about 1.06%.

Looking first at the Precious Metals and XAU advance/decline lines and we continue to see an accelerated pace to the downside as the price of gold lost another 1.19% while silver got cold cocked lower by 4.46% and closing the week at its lowest levels in 4 years. With the Yahoo Gold/Silver 30 stock advance/decline line (not shown) now at new reaction lows for the year, it is now expected that we'll see gold join silver in breaking below its price pattern lows of 2013, with an initial downside symmetrical triangle measuring target of around $1100 an ounce in the cash market.

The weakness in the precious metals had its usual affects in the global indices that have a heavy economic exposure in earth related commodities with Canada's Toronto Stock Exchange (-1.71%) and the TSE Venture's Exchange (-3.21%) having a bad week, while Australia's All Ordinaries Index was down 1.72% as the Aussie advance/decline line collapsed below its intermediate term rising bottoms line shown on the chart. With the price of West Texas crude oil now down another 4.25% for the month of September, and a whopping 13% since July, the expectation from this juncture is for continued weakness in all earth commodity related products and their country's indices for the next couple of months until, at least, gold's downside price target of $1100 is met.

Here in the United States, both the NYSE Bond CEF and NYSE REIT advance/decline lines remained weak with no sign of reflex, while the NYSE Composite and NYSE Specialty CEF advance/decline lines continued to hug their rising bottoms lines from the beginning of the year. Our biggest problem though for this week is that the BETS indicator plummeted to a "Neutral, Cash Position" reading of ZERO on Friday and it's now at its lowest levels since December 13th of last year. Because of the intramarket divergences were seeing right now with prices in the large caps (Dow, OEX and SPX) at new all time highs, while the broader market New York Composite Index, along with the NASDAQ Composite, MID Cap and Small Cap indices continuing within a choppy sideways trading range, this is a huge cautionary signal that some sort of correctional phase will be needed to sort out this breadth to price inconsistencies. Because of this, and the divergences we currently have in many of the breadth and volume McClellan Summation Indexes, as well as an "Hindenburg Omen" being triggered on Friday,
a full cash position is now warranted for the sake of capital preservation. Those who are inclined and have the experience of trading in declining markets should begin to look for products that show pattern weakness to exploit the same. As of this time, it would appear that we are working with a double top formation within the context of a larger high level consolidation pattern that's shown with this week's BETS chart. Any break below this outlined trading range would give us a downside price target for the NYA of around 8950 or almost 19% from current levels...well worth the defensive posture. It is also expected that any break to lower lows in equities should see an allocation shift to interest rate sensitive issues (such as bonds) as a defensive play, and this should take care of the breadth/price resets that were mentioned last week.

Let's see how it goes.

Have a great trading week!

US Equity Markets:

[breadthspx091914]



[breadthdjia091914]


[breadthspec091914]


[breadthpre091914]

US Interest Rates:

[breadthtnx091914]

US Real Estate:

[breadthreit091914]

Precious Metals:

[breadthpm091914]


[breadthxau091914]

Australia:

[breadthaus091914]

England:

[breadthftse091914]

Germany:

[breadthdax091914]

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