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fib_1618

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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.

What a volatile week it turned out to be as the major market indices lurched lower, higher, lower and higher again in finally settling the week down an average of 1.69% over the previous Friday's closing levels with the Mid Caps and Small Caps again leading the way lower with 2.33% and 2.23% losses respectively.

Starting again with the Precious Metals and XAU advance/decline lines and we see that both of these money flow lines finished the week at new multi year lows while the price of gold and silver consolidated somewhat from their poor performance of the first 3 weeks of September. With these A/D lines continuing to show weakness, along with the Precious Metals McClellan Summation Index breaking support of its rising bottoms line going back to 2013 (see "Internals" post on the Main Board), we'll continue to look more downside action over the next several weeks toward our first symmetrical triangle downside price target of $1100 for the cash gold market.

Looking elsewhere and we see that last week's volatile session in equities was a direct result of the NYSE Composite advance/decline line finally breaking below its trendline support from February of this year. Meanwhile, the NYSE REIT advance/decline line saw heavy selling as money continued to shun the interest rate sensitive issues issues in general. With intermediate term market breadth, as measured by the McClellan Summation Index, continuing to show intramarket inconsistencies between the large, mid and small caps, along with the broader NYSE and NASDAQ exchanges themselves, let's continue to look for choppy, volatile behavior with a bearish bias until we begin to see these same conflicting signs sort themselves out.

Over in the internationals, the Aussie advance/decline line continued to feel the weight of global precious metals weakness and it's now challenging the bottom of its 1 year range. Any break below these current A/D levels would then give us a new downside price target of around the February price lows of 5100 on the Old Ordinaries Index. Looking at Europe, and we see that the DAX and FTSE advance/decline lines continue to meander within their respective symmetrical triangle configurations while the price indexes sagged lower as the rest of the global markets consolidated. With the U.S. markets now in a position to see some additional relief early next week from their deeply "oversold" readings from last Thursday's sell off, let's look for these European Bourse's to follow New York's lead initially and see what kind of information we're left with next week. 

So...with a large assortment of economic data on the calendar for next week, it's expected that the great majority of this same information will be used as as a guide to how the market will likely to react for the rest of the month of October. Internally, with the breadth and volume McClellan Oscillators reaching their highly "oversold" readings on Thursday, the expectation remains for this current short term pause in the longer term bullish action will need the majority of October to begin and finish the process of creating our next foundational groundwork from where prices will be to able to trend to the upside. Adversely, any further weakness below Thursday's MCO lows will extend the time needed to accomplish this same internal base. In any event, October is setting up to be another one of those historic periods as both sides continue to battle on the field of play for overall control.

Have a great trading week!

US Equity Markets:

[breadthspx092614]



[breadthdjia092614]


[breadthspec092614]


[breadthpre092614]

US Interest Rates:

[breadthtnx092614]

US Real Estate:

[breadthreit092614]

Precious Metals:

[breadthpm092614]


[breadthxau092614]

Australia:

[breadthaus092614]

England:

[breadthftse092614]

Germany:

[breadthdax092614]

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