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Technical Watch Weekly Breadth Data - 3/6/15


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#1 fib_1618

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Posted 20 March 2015 - 07:53 AM

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Weekly Breadth Data, Week Ending March 6, 2015

It was a market week that provided great promise on Monday, turned to indecision mid week, and then finally sold off on the perceived strength of the economy as represented by the unemployment figures on Friday. When all was said and done, the major market indices finished with an average loss of 1.49%, week over week, with the value packed New York Composite Index showing the largest loss of 1.99%, with the growth weighted NASDAQ Composite Index giving back only .73% after crossing the 5000 price threshold for the first time in 15 years.

Looking over the NYSE related breadth charts for this week shows that all remain in rising trends in spite of Friday's shake out with both the NYSE Bond CEF and NYSE Preferred advance/decline lines moving to new all time highs on Thursday before pulling back on Friday as interest rates on the 10 year note moved to their highest levels since the end of December. The NYSE REIT advance/decline line also took a tumble on Friday, but it remains well above its intermediate term rising trendline that goes back to the lows of last September. With interest rates moving higher without the benefit of money first moving out of the Bond CEF issues, along with the prices in Real Estate iShares leading money to the downside, this instructs us that the sharp movement in rates was more of a knee jerk reaction than it was technical in nature, and that a reset will now be needed to provide a better breadth to price relationship. Because of this, and with the 10 year note now at the top of our expected target range of 2.25%, it wouldn't be too surprising to see rates start to trend lower from current levels over the next several weeks.

Looking overseas and we see that the Aussie, DAX and FTSE advance/decline lines also continue to trend higher in spite of New York's trip and stumble on Friday. The DAX Index, in particular, continues to show the greatest amount of global strength right now as it once again closed the week at new all time highs in both cumulative money flow and with price. This week we're also excited to add to the internationals group India's Bombay Stock Exchange advance/decline data of approximately 3100 issues to our review each week and it will be positioned at the bottom of the page. The current chart shows that while prices in the BSE 500 Index were making new all time highs on Wednesday, the BSE advance/decline line has been stuck in a symmetrical triangle since the early November period. A longer term look, however, shows that the overall trend in this money flow line remains above a trendline that goes back to the August lows of 2013. Putting the two time frames together then, it will be important for the bulls to break north sooner than later to help confirm the latest price highs for a break to the downside would also violate this longer term trendline as well.

The precious metals asset class had a tough time of it on Friday as money moved with great velocity out of this sector as the cash price of gold broke below its December 2014 lows on the idea that Federal Reserve would not be providing any further easing of monetary policy if they are strictly using the job's data as their economic proxy. The damage in both the Precious Metals and XAU advance/decline lines were all encompassing as both broke sharply to the downside with this pattern breakdown in the price of gold and are now within striking distance of challenging their December low points. Aside from any obligatory technical snapbacks we may see in this group next week, we will continue to be highly defensive toward this area of investment for the time being, with a downside price target for gold of around $1100 back on the front burner.

So although there wasn't too much internal damage last week on a intermediate term basis, the BETS indicator still wasn't able to break above its declining tops line and it wound up back to a "neutral, cash position" reading on Friday. Because of this, it's now very likely that a more prolonged "pause to refresh" will take place that will likely extend into this month's quarterly OPEX period on March 20th. Near term then, let's look for a firm couple of days to start the upcoming week with choppy, sideways action becoming the predominate theme in preparation to, what should be, another rally attempt to new price highs sometime after the 18th of the month.

Have a great trading week!

US Equity Markets:

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US Interest Rates:

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US Real Estate:

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Precious Metals:

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Australia:

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England:

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Germany:

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India:

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Technical Watch's Breadth Data Review includes a weekend recap of hard to find breadth measurements from the New York Composite Index, the London exchange (FTSE), the Frankfurt exchange (DAX) and Sydney's All Ordinaries index. Charts are provided with a market narrative by Dave Breslaw and are annotated for additional clarity and suggested positioning. Also included with this service are occasional special posts of longer term data charts to provide a comparable historical context of how internal action of the markets (money flow) can have a direct effect on the direction of price itself. This service works hand in hand with the Chatting the Market subscription service as it provides additional global money flow insights found nowhere else on the internet. More information on subscribing to either or both services can be found by clicking here.

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