Hi there, and welcome back to CRI's S&P 500 blog.
With the new year and new quarter upon us, CRI has been patiently waiting and watching to see where we might be heading over the coming months*. Considering the significant bottom in the US dollar and tops in the Euro. & gold, we may be getting an indication already of what to expect for Q1'11.
Specifically with regard to SPY, the repeated message must be:
'As has been the case for many weeks now, the SPY is pointing higher. Regular readers of this blog will recall CRI's bullish enthusiasm coming out of the US mid-term Congressional elections and the announcement of the US Fed's QE2 program. Fundamentally we experienced a dramatic political shift in Washington coupled with a guarantee of an additional $600 billion in Fed. bond purchases before the end of Q1'11. Technically, the market registered a very well defined double bottom breakout from 112.58 (our 'trader buy signal') coupled with a nice cross of the 13 EMA back above the 30 SMA (our 'investor buy signal').'
Currently, stops on this trade should be just below the recent lows at 116.97. Considering that level is more than 10 points below current levels [with short term support near the 13 EMA (121.69)] new purchases ought to be delayed until some sort of consolidation comes in. On a longer term basis, investors ought to take some solace in the fact that the market has broken cleanly through the spring 2010 highs. This monthly breakout suggests the current cyclical bull run is far from over.
That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com
*The first two weeks price action each quarter is a really good guide as to where new money may be flowing during the entire quarter.
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