Around the Globe

Asia – CLOSED
• Shanghai (China) -0.74%
• Hang Seng (Hong Kong) +0.42%
• Nikkei (Japan)-1.43%

Europe as of 6:14am EDT

• DAX (Germany) -0.17%
• FTSE (UK) -0.36%

Today’s Economic News:

We are very light on news, but remember, it is OPEX Friday.

Quote of the day:
When you come to a fork in the road, take it. – Yogi Berra

Current Breadth Readings:

Breadth is the engine that drives the markets and when it starts to lose power, compared to price, we start to think “watch out”.  We have picked the CVI (Cumulative Volume Index) for our focused breadth chart today. This is a Worden index:

This indicator is sometimes called up volume/down volume. It is calculated by taking the volume of the advancing issues and subtracting the volume of the declining issues. It is a cumulative indicator, so the value is meaningless. This indicator is interpreted the same way the advance/decline line is interpreted. If it begins to trend down while the averages are trending up, it is a bearish sign. If it begins to trend up while the averages are trending down, it is a bullish sign.

We pointed it out yesterday and remain concerned today that the value is less than the early July peak while we are pushing higher highs in the indexes.  That divergence is making us suspicious of this push and new high top.    When we do correct again from up here somewhere, it will be the “Z” or third peak.  That is beginning to put us on the bearish fence.

ES SP500 Futures Comments:

Short: 1382
Long: 1346

We just might be a little bearish today, except that price is already weak pre-market.  We would like to see 1382 hit and then do another good correction, or if the markets want to really rip, give us 20 up and fix those divergences in the breadth data.   The breadth trenders remain on the bull-side which means we are to ignore some of the early divergent signs and “stay the course” (Bull).

We will look for weakness in the 1382.  If we see a run that exhausts, we would be thinking short for next week.   Despite a couple of really good thrusting up days, we have not had that 4% week on the wide breadth value line.  That leaves the Ned/Davis sidelined through this entire run from the June low.  It would be unusual for the markets to take off from that kind of weaker thrust, which makes us think there is one more “Tower of Terror” drop before before the year end finale.   It could be 1382, we don’t know.  Next week should set us up for the Fall, or to be clear, I should say Autumn.

It is Friday options expiration with very little news and a weekend getaway trading crew.  Have a great weekend all.

US Dollar DX Futures Comments:

So far the 82.81 area is holding. If we do bounce here back to the 84, we would expect to see the equity markets begin to take it on the chin.    Our call is for eventual failure back down to the 81 area, but we think there is more battle to be fought here between 83 and 84.

TLT Twenty Year Bond ETF Comments:

TLT is rounding the top.  We still think there may be one more push attempt up which has us cautiously bullish on equities with a nervous eye on the TLT.  Once TLT reverses trend and begins to head toward the sub 100’s, the markets will be  roaring.  We are watching for a possible handle forming to the cup here, if that does form and break out to the upside you can begin calling Mittens Mr. President as TLT runs to the 135/36 area.

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