As this up move in the market reaches into its 8th month one gets the impression things are building to a climax. Government stimulus measures have been enacted, economies have responded and talk of new bubbles in some areas of the world have begun in earnest. With that being said, the charts have suggested being long the market (our signal line being when the 13ema crosses back above the 30sma - which I have talked about at length in previous blog entries) and are NOT flashing sell signals as of yet.
While I have suggested in my most previous blog entries that the market wants to move higher, I myself have been relatively neutral since we hit the two previously prominent upside targets (the gap at 107.5 and the 50% retracement level at 108). I continue to lean towards wanting to exit the broader stock market as I believe we are in the 7th or 8th inning of the most recent bull run. But just because we are near the end, doesn't mean we are at the end... So with all that being said, lets take a look at what is happening and consider what might happen given the market's recent bullish price action.
Indeed, now that the market has consolidated its recent gains and broken out higher, those previously significant resistance levels may now act as support going forward. Additionally, we have now established a secondary uptrend channel (Marked B. in solid blue on the chart) within a primary uptrend channel (Marked A. in light blue on the chart). This all points to a serious test of the 120 level in the not too distant future. As well as being the conjunction of two trend lines (the upper of B and the lower of A) the 120 area is where the 200sma currently sits. Notice the lows of early 2008 are also in this area too.
As far as I can see, its business as usual for the stock market...
That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com
No comments:
Post a Comment