As per my last few posts, the market continues to point higher - the 13 EMA is still very comfortably above the 30SMA suggesting higher prices are still ahead. The conservative adviser in me suggests one ought to be looking to take profits on positions picked up into the 2009 panic lows. The market has completed a 50% retracement of the entire two year bear market (by trading back above 108.755) and has filled in a very rare Gap on the weekly charts at about the same level. The 'easy' part of the dead-cat-bounce' phase of the market is now behind us and one ought to be very careful about having too much money on the long side of the market.
Since we are still in a bullish stance, upside targets ought to be considered going forward. As well as heading into a high traffic area on the chart (between 120 and 130), there are two significant technical targets in that area as well.
1. The bull flag pole formation target is currently at 125
2. The 200 period SMA is at 120
I expect this area (120 to 125) to represent the next major hurdle for the market as we head into 2009 year end. Since the EMA/SMA relationship is still pointing bullishly we have no choice but to keep looking for higher prices ahead. Once this relationship has turned negative we can look for prices to head back down but that seems to be a while down the road yet.
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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