As has been the case now for some weeks, the broader US stock market (as measured by the S&P 500 depository receipts - SPY) has been and continues to point lower. While the past two weeks have seen an impressive rally of almost 8%, we have yet to get back up into significant resistance let alone break any existing trends. The current bear flag pole formation (that was confirmed when the market moved below 103.89) will be solidly in place unless prices can get back above 113.20 (POINT A on the chart above). And as long as that formation is in place, I will continue to look for a move to its respective target of 95.55 (Point B on the chart above). Coincidentally, a natural 50% retracement of the entire 14 month bull run would bring prices back to the 93.27 area.
This therefore then shall be my target window going forward: 95.55 to 93.27.
For those investors out there, you should recall just a few weeks ago that we were issued an 'investor sell signal' when the 13 EMA crossed back below the 30 SMA. The SPY was roughly 110 and that shall be our high water market going forward. For those investors out there, one ought to just sit in cash for the time being and either wait for a 'market-panic' (it will be obvious when it comes) to do some cherry picking or for the moving averages to cross back bullishly. Frankly, I don't know which scenario will play itself out, but I have found that listening to the market is sometimes the hardest thing to do........and the market isn't happy right now!
That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com
