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fib_1618

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Even with all of the negative fundamental back drop, its been a good couple of weeks for the bulls as the data continues to show great buoyancy overall.

The NYSE Composite advance/decline line continues to position itself just below its all time highs liquidity mark, while the NYSE Common Only advance/decline line improved on last weeks breakout above its declining tops line that had been controlling the pattern since mid September. As long as both of these breadth lines continue to improve, the overall market should continue to rise in spite of what many maybe thinking and feeling should otherwise be the case.

The NYSE Preferred, Specialty and Bond CEF advance/decline lines all took a pause this past week, while the NYSE REIT advance/decline line showed improvement and continued to lead prices higher. As long as these four interest rate sensitive A/D lines remain constructively positive, equity prices should continue to appreciate in value over the next couple of months.

On the negative side, the Precious Metals, XAU and Australia's All Ordinaries advance/decline lines remain under pressure in and around multi year if not their all time lows. However, it should be noted that the XAU advance/decline line is now showing some minimal divergence this week with price, so we'll have to watch to see if this might be an initial indication of a possible bottom in process.

And finally, we move to the DAX and FTSE advance/decline lines which continue to do the unthinkable by moving to new recovery and all time highs respectively. Given the perceived negativity we're told about in Europe, this contrary move in which money is showing strongly suggests that things may not be as bad as what they seem, either that, or there is so much money in the system that it has to go somewhere just so it can say it's "invested". Regardless of the reasons, as long as money is leading the way, the expectation is for continued price strength in both of these markets.

Have a great week!

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