The correction cycle has played itself out (5.5 weeks after an 11 week rally) and we are now waiting for the next piece of significant economic data to break us out of this current trading range.
One analyst's opinion (Elaine Garzarelli) suggests strength will come from the industrial sector - considering the dramatic increase in cap-ex spending reported in the latest Chicago PMI report [For more on this please refer to the latest edition of The Canadian Rational Investor's newsletter (Q1'10) recently published and posted to the site]. While this ought to help the Dow Industrial Average, SPY might under perform because of its consumer weighting. Regardless, we here have been looking for the market to move higher into the spring and this might just be the piece of data the market is looking for.
As was the case last week, the SPY is currently range bound between the highs at 115.14 and the recent lows at 104.58. The 13 EMA remains well above the 30 SMA so our 'investor' stance remains bullish. Considering the seasonality, the extremely steep yield curve (again please refer to Q1'10 CRI newsletter for more) and a now washed out investor sentiment, one ought to continue to look for higher prices in the not too distant future.
Once the seasonal window closes, there could be a lot of trouble for the market. That does not happen till June, so until then I shall remain cautiously bullish with an expectation that the highs of late will be taken out in earnest over the coming weeks.
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