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fib_1618

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Finally, the BETS indicator saw some follow through to the downside as it moved to a -5 this week putting it below the zero line for the first time since since July 5th. Along with Wednesday's technical breakdown where we saw many of the McClellan indicators moving to new lows, this would continue to suggest our maintaining a defensive posture in what now should be a correctional sequence that will likely conclude before the early part of February.

It was quite a week for the stock market as the major market indices moved sharply higher after the FED's announcement that they were only mildly cutting back on their asset purchases while keeping with a "highly accommodative stance of monetary policy (that) will remain appropriate for a considerable time (even) after the asset purchase program ends and the economic recovery strengthens". With Janet Yellen due to take over the Chairman duties in February, this sent a clear message that this same policy accommodation of extraordinary low interest rates is likely to continue well into 2015, and the markets responded by closing up by an average of 2.6% for the week. The small caps, being the biggest beneficiary of such policies, led the charge by closing up 3.25%.

A quick look at the breadth charts this week shows that any new price highs that were seen were not confirmed by money flow leading the charge. This would then indicate that much of the gains were on the back of short covering (at least initially), and if fresh money doesn't move in to support these same gains near term, we should see some backing and filling over the next week or two to provide a reset in this breadth to price relationship. On a charting basis, this would also serve as a technical snapback to what were the previous price highs that we saw in November.

The biggest winner this week was with the NYSE Bond CEF advance/decline line which was already showing good strength prior to the FED announcement and then raced up after the statement to challenge its intermediate declining tops line going back to May of this year. This move in money flow back into the bonds then provided a peak in rates in the 10 year note at the upper end of its trading range outlined on the chart. Any break above this same declining tops line would then indicate that we've peaked in rates for now, and we should then move all the way back down to the lower end of the pattern range over the next several weeks. Additionally, any move above the October highs in the NYSE Bond CEF A/D line would then suggest that liquidity is becoming more plentiful, and this then would lend support to the precious metals complex later on down the line.

Speaking of the metals, the Precious Metals and XAU advance/decline lines were the biggest losers again this week as money moved back into debt and equity markets. However, with the price of gold moving to new three year lows on Thursday and now less than $50 away from reaching its downside target of $1156, and the Precious Metals Bullish Percent Index now providing bullish divergence with gold's June lows, it may not be too much longer before we'll see this asset class present itself with a buying opportunity by the spring of 2014.

All in all, the market provided another good example of why we should continue to never under-estimate its underlying strength, and with the BETS racing back to a reading of +30 this past Friday, we can once again "Re-initiate Longs with Protective Bearish Stops (below market)".

Wishing you all a great holiday season!


US Equity Markets:

[breadthspx122013]



[breadthdjia122013]


[breadthspec122013]


[breadthpre122013]

US Interest Rates:

[breadthtnx122013]

US Real Estate:

[breadthreit122013]

Precious Metals:

[breadthpm122013]


[breadthxau122013]

Australia:

[breadthaus122013]

England:

[breadthftse122013]

Germany:

[breadthdax122013]

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