As previously stated, we here at CRI have been looking for a cycle low to be established (expected correction duration was for 5.5 weeks) and a test of the recent highs at or near 115.14 to begin. The correction did satisfied the downside 'trader' targets (being a move back to the 30 SMA and the gap at 106.42 filled) but was not enough to change our 'investor' stance (as the 13 EMA is still above the 30 SMA we must remain cautiously bullish). What concerns me is that the market rallied into an options expiration (Fri. 19th). Normally one would expect the market to be weak into expiration, the fact that it rallied more than 600 points (in the Dow's case) is concerning and suggests there might be a little market manipulation going on.
So as we sit at the moment, the best one can take from the current market is that it continues to point bullishly into the spring but one must respect the fact that we are currently 'range bound' between the recent lows (104.58) and the recent highs (115.14) and shall remain 'range bound' until either one of these levels is taken out in earnest (volume will confirm that).
My hunch is that IF 104.58 IS taken out, it shall be enough to trigger a change in our 'investor' stance (ie the 13 EMA will cross back below the 30 SMA). Of course that has NOT happened yet so we remain cautiously optimistic and understand that IF that does happen 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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