Posted to email subscibers July 30th..
$TSX nearing an inflection point
Most of you know that I am a chart watcher and if asked where I go first to find out about a stock... I will always tell you the chart. There is a very interesting technical set-up for the $TSX index which is telling me that we are nearing some sort of inflection point over the next 3 to 4 months. I have no idea what that catalyst is or even if we are going to breakdown or breakout. What I can say is that when this break happens its going to be with force. One way or the other.
If you were to just gauge retail sentiment. You would think we are at the end of the world when it comes to stocks. Financing has dried up. There is no new money other than what was already precommitted to projects and the volumes have completely dried up to practically NIL. On the other hand... I think contrarians work best when they are contra the herd, not contra an idea. You cannot get any worse sentiment in this sector.
For commodities and materials in particular.... The last 18 months has not been fun except for the odd rocket, but nothing in this market can sustain a run. What is even more odd is that in spite of such bearish sentiment North of 49... The US markets look the exact opposite and have gone through a nice correction in May should now continue the 'face ripper' they started in December when a lot of stocks put in their lows.
It's a confusing time for sure. What might be your leading indicator could be gold. If POG can break this last downtrend, it may signal that event this Canadian dog might be putting in its lows. It will certainly help put in a floor ont he venture cosndiering the abnormally large amount of gold stocks on the index. At any rate. I would not be fully invested in this market yet. Not until we get our signal. Speculate all you want and fish with your stink bids. But buying this market gives you odds similar to betting a color on the Roulette wheel. The only one making money is the house.
I am looking for anything sustained in August over 12,000 - 12,100 as buy signal.
A Wedge Within a Wedge...
Chart shows that $TSX price action on verge of breaking the recent trend in declines...
If you are looking for clues like myself... the next chart shows a slight acceleration in a declining trend. This usually happens before a precipitous crash or a series of capitulation events in the market. What you might take if a break in the smaller trend occurs is that there is no accelerated decline. It was all needless panic. It may foreshadow a larger break in trend. But then again... it could be a head fake. With that big giant head and shoulders pattern on the $TSX screaming disasaster is on the horizon... you just can't go long until the sell signal resolves itself.
Remember... I say MAY foreshadow a trend in break. As always... looking to Europe in this never ending saga.
As the saying goes... "Buy in September and Remember" Certainly the entry points haven't looked this good since 2009.
I say if you want a sexy bottom... the best skin is at the beach in August.
Please wait for confirmation. Not too much longer.
Happy Trading
Christopher Skidmore
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