A substantial rally never materialized this summer to the great disapointment of the bulls. the 113.20 level held firm with the market failing at 113.18. Since that time we have quickly moved lower and are now in the process of testing the late June lows (101.13). To be blunt - as we head into the often precarious season of fall, the market is looking a little ill again.
Regular readers will of course be well aware that we were issued an 'investor sell signal' now almost three months ago and those out there that do consider themselves 'investors' oought to be sitting on the sidelines waiting for the market to clean itself up. Considering the last 'investor-sell-signal' was in November, 2007 and the next buy signal didn't come until the spring of 2009, investors out there may be sitting on the sidelines for quite some time.
As for where CRI thinks the market is going in the short term - A simple 50% retracement of the 14 month up-move seems like a logical place to start. So having said that, my price objective is the bottom of the current downward pointing channel which happens to coinside with the indicated 50% level (at or near 93.27 on SPY).
I don't think this is going to be a mind bending correction considering the important mid-term US elections coming up in November. I do believe there is a really good chance we are setting up for a mind bending correction for 2011....but we will cross that bridge when we come to it.
That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com
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