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fib_1618

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After a rough start on Monday, the markets put on a hard reversal on Tuesday and wound up recouping 62% of the entire market decline from the September 20th top. Breadth wise, both the common only and composite NYSE breadth advance/decline lines once again snapped back to or towards their intermediate term declining tops lines. Until these trend lines of negative resistance are breached, the bears will continue to control of the overall action.

In other areas, after breaking below its longer term rising bottoms line last week, the NYSE preferred advance/decline line fulfilled the expectation of a snapback to this previous line of support. It will be important for the bulls that this breadth line remain above its August 8th lows during this consolidation period.

The NYSE bond CEF advance/decline line also topped out on September 28th, but remains well above its longer term rising bottoms line. Also of note is that the yield on the 10 year note broke above its accelerated declining tops line this week settling back above 2% for the first time in 3 weeks.

In what continues to be constructive behavior, the NYSE REIT advance/decline line remained bouyant as prices moved to new correctional lows. This kind of "trend divergence" continues to support a strong case that this sector will probably lead the general marketplace higher once this correctional pause finds its final completion.

The precious metals data remains mixed with the XAU advance/decline line finding trendline support while the PM advance/decline line tested its October lows from last year. The expectation here would be for a continuation of the bounce from last Monday's lows near term in what should be early preparation for price pattern lows in the next several weeks.

In the internationals, the All Ordinaries Index provided a double bottom formation right at its downside objective. With rumors of a change in policy with the Reserve Bank of Australia, along with the expectation of a market low in this time period, we'll see if we might just be looking at a pause in the downtrend or a tradable low here all dependent on whether the XAO advance decline line can begin a constructive pattern of a bottoms above a bottoms or not.

Finally, both the FTSE and DAX advance/decline lines remain under the influence of declining trends in their structures with price leading breadth to the upside in the DAX price index suggesting a reset will be needed near term. As with the NYAD lines, until these lines of negative influence are violated, the bears will continue to control the larger trend.

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