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Given the recent and ongoing breakdowns in both the breadth and volume McClellan Summation Index', the expectation is for some downside action to minimally challenge the Black Friday price lows. Whether we start building internal divergence or not is still up for discussion, but we should hopefully have a better handle on this question with next weeks update.

Well...what initially started as a good start for the bears turned out to be a rout for the bulls at the end of last weeks action with the majors up some 3%. We'll call that a rare miss in a market that most would call "hard to get their arms around".

Of special note this week, the NYSE preferred stocks advance/decline line once again joined the Bond CEF's into new all time high territory. As long as these two variants of the NYSE advance/decline line continue to make new highs, it tells us that market liquidity remains quite fluid and should be able to absorb any near term shocks to the system. It also tells us that general market conditions are favorable enough to see higher equity prices in the future. Also of note is that the NYSE REIT advance/decline line not only broke above trendline resistance, but it's also leading prices to the upside. Conditions like this are usually quite favorable for continued longer term buoyancy for the equity markets in general.

The precious metals/XAU advance/decline lines floundered after being sucker punched the week before...nothing new to report there. Australia and the DAX continued to have their problems, but the FTSE echoed the positive early week turnaround in the US markets. And finally, although the Dow closed at 4 month highs on Friday, the NYSE common only advance/decline line did not confirm the move. This would suggest that some sort of near term reset will be necessary before the bulls will have a real chance of an upside breakout...probably at the beginning of the new year.

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