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fib_1618

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But the market then broke down even further on Thursday and took away these same divergences, and what was initially a simple corrective sequence, has now turned into something much more that needs to be respected for what it may suggest for the rest of the calendar year.

Something much more, indeed, as the bulls had a back breaking week highlighted by Wednesday's rout which caused quite a bit of technical damage both internally and price wise no matter where you looked.

Of special note this week we see that the NYSE Bond CEF advance/decline line broke decisively below its long term rising bottoms line which may be our first indication that interest rates for the 10 year note maybe finally finding some sort of bottom in the current vicinity of the lows of last August. We also see that both the Precious Metals and the XAU advance/decline lines are now within striking distance of their multi year lows after breaking pattern divergence in the XAU this past week. Taken together, this might indicate that the FED is pretty much done with its "Operation Twist" monetary policy with it being more of a tactical failure than it was a success.

Since we are currently "oversold" on many of the McClellan Oscillators that we follow, no less seeing that we are either at or just below major rising bottoms lines on all of the breadth data shown below, along with the Thanksgiving holiday, next week will probably provide some additional choppy behavior as the market participants battle it out for near term supremacy. At this point, our target of a possible mid December bottom remains intact as long as the 52 week lows of the breadth McClellan Oscillators are not taken out. If they are taken out, we will discuss the ramifications of such of an event when and if this takes place.

I wish everyone a great Thanksgiving Day holiday!

Have a great week of trading!


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