So far, so good. A genuine reversal appears to be unfolding in the CDNX as we recently suggested was probable based on a series of technical indicators. The Index was up 22 points today to close at its session high of 2049.
And could history be repeating itself? Back in 2005, from March into May, the CDNX corrected 21% over 50 trading sessions. The market then climbed above its 10-day moving average (SMA) and never looked back the rest of the year – it rose steadily and gained 40% from the May low within seven months. This year, from March 7 through May 17, the Index fell 20.6% over 51 sessions. It has now climbed above its 10-day SMA, though we’re still waiting for that moving average to reverse to the upside – that could happen as early as tomorrow.
The bullish action in certain individual stocks – Canaco Resources Inc. (CAN, TSX-V) for example – is additional evidence that a powerful run could be underway in the CDNX. The big early movers (within the resource sphere) are likely going to be the more established exploration plays and we’ll be reviewing some of those in our morning update which we’ll be posting at approximately 7:45 am Pacific.
John provides two chart updates tonight – the CDNX and the CRB Index which often move in tandem – we need to watch the CRB closely in order to gauge the potential strength of any upside move in the CDNX.
TSX VENTURE EXCHANGE (CDNX)
CRB INDEX
