All donations go towards web site maintenance for all of Technical Watch,
keep it free of charge, and may be tax deductable as an investment expense.

PayPal Verified
Join our market chat sessions every Tuesday and Thursday at 4:00 pm Pacific time!
More information on subscriber services can be found at

Sign up Calendar Latest Topics

Note: This topic is locked. No new replies will be accepted.

  Author   Comment  

Posts: 4,899
Reply with quote  #1 
(From 9/2 review) This would suggest that the August 9th crash lows are probably going to hold for a couple more weeks before we actually see a retest of these same lows beginning sometime after quadruple witching on September 16th.

So it is written, so it shall be done. Let's see how things settled.

The NYSE composite advance/decline line
finally broke below its intermediate term rising bottoms line and this provided the catapult for the New York Composite Index (seen on the Preferred A/D chart) to close at its lowest levels since early September of last year. This is also the same downside price target given by the NYSE breadth McClellan Oscillator back in late July. This pattern breakdown also pushed this advance/decline line below its 200 day EMA (1% Trend) which is the first part in our long anticipated bottoming process (see this weeks Cumulative Charts). The next step is to see how the A/D line reacts as it approaches the tsunami lows of last March (marked with the orange horizontal line on the chart) where we anticipate longer term support and from where a our constructional base is likely to begin.

The NYSE common only advance/decline line settled at its lowest levels since November of last year confirming the downside break from the bearish flag pattern on the Dow Industrials. Given that the New York composite index has reached its downside target area from last September, it would be a reasonable expectation that we should see both the Dow and the SPX approach these same price targets before we'll see a tradable bottom. For the Dow that would be in the area of 10,050, and for the SPX, 1050.

The NYSE bond CEF and preferred advance/decline lines continued to trend higher with the bonds moving to another all time high mid week, while the preferred stocks are once again resting on their longer term rising bottoms line. We'll have to watch the preferred line especially over the next couple of weeks for any break of trend, and if violated, whether or not the tsunami lows of March will also provide the needed support to help the bulls construct our anticipated bottom in the early October time period. We should also note that the yield on the 10 year note closed at an all time low of 1.715% on the back of the FED's policy statement.

After snapping back to or toward its intermediate term rising bottoms line, the NYSE REIT advance/decline line also moved lower with the rest of the market, but remains quite buoyant with the low cost of money supporting its future expectations. Since we minimally have a couple more weeks of correctional activity ahead of us, it wouldn't be surprising at all if this A/D line continues to move lower in its effort to test longer term support which is also in the vicinity of the tsunami lows of last March.

The precious metals stocks succumbed to the severe weakness we saw in commodities in general mid week, but both the PM and XAU advance/decline lines remain in pretty good positions currently to where this might be part of a larger pattern of constructional support. Gold itself has now retraced .618% of its advance from the July 2011 lows to its recent highs, so we might see some firmness to help the internals out in building this foundation early next week. In the meantime, the downside break in the XAU index has generated a downside price target of around the 160 level...we'll see how that goes.

Meanwhile the Australian advance/decline line remains weak, but the bigger news is that the All Ordinaries Index is now within striking distance of its downside pattern target that was given back in June just as other global markets are approaching their targets. This shouldn't be too surprising given the degree of which global trading has its technical influences over the last decade.

Although the FTSE price pattern itself broke to the downside last week, the FTSE advance/decline line continues to remain in a rising structure providing bullish divergence. The summer lows of last year come in at around the 4805 level, so if the internals can continue to hold up on any further price weakness towards these same lows, this would provide additional evidence that an important bottom might be coming in the next couple of weeks.

Finally, the DAX remains under heavy pressure probably due to their leadership role with the European Union. Since the price pattern itself has already broken below the summer lows of last year, the next area of support should come in at the summer lows of 2009 at around the 4600 area - a full 600 points below current levels. With the Greece situation coming to some sort of finality next week on whether they'll be able to pay their debt or not, the German markets have the most to lose on any default, and this may be part and parcel of any global price bottom we might see during the month of October.

US Equity Markets:

US Interest Rates:

US Real Estate:

Precious Metals:




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

Previous Topic | Next Topic

Quick Navigation:

Easily create a Forum Website with Website Toolbox.

Copyright 2000-2019 Technical Watch