After filling in the noticeable gap on the weekly charts (and at the same time completing a text-book 50% retracement of the entire bear market run) the market has gone basically nowhere for the past 5 weeks. Currently, we are flirting with the bottom of the bullish price channel and a break back below it would suggest the market is correcting in the short term and may give those traders out there an opportunity to make some money on any quick price fall. And really, a period of consolidation isn't out of the ordinary for a market that has rallied almost 70% from the bottom.
For those investors out there, we are still very comfortably within a bullish price trend (as signaled by the 13 EMA crossing back above the 30 SMA last May) for the SPY. Until those moving averages cross bearishly again, I shall be looking for the SPY to rally up to the 200 SMA which would bring prices to the upper end of the bullish channel we are currently in. This would also bring prices back into the range they were in just prior to last years financial meltdown which may in itself bring more sellers back into the marketplace.
As for myself, while I sit on a substantial amount of cash I am patiently waiting for either a consolidation or an outright correction before placing any new money into the marketplace...
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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