CDNX and Gold
The CDNX was up another 9 points this past week, closing at 1489 (right at its declining 100-day SMA) and is now resting just beneath major resistance between 1490 and about 1515. As BMR’s technical analyst pointed out so effectively in an earlier post today, a CDNX breakout is imminent and after getting through this resistance the Index should challenge its 52-week high of 1691 during the final quarter of this year. That means there is some exciting trading ahead and potentially a lot of money to be made if you’re invested in the right stocks. This is a very similar situation to 2004 when the CDNX climbed 25% by the end of the year from its late July low. While the CDNX still has a declining 100-day SMA, its 50-day SMA has recently reversed to the upside which is providing fresh fuel for this market to push through resistance. The 200 and 300-day SMA’s continue to rise with no threat of any change there, confirming the CDNX’s primary bull market trend. The fact the CDNX has outperformed the major markets, Gold and the TSX Gold Index since early July is hugely bullish and suggests the world economic recovery is not quite as fragile as some are suggesting. In the United States, where there does appear to be a slowdown in economic activity, the Fed can be expected to pull out all the stops which includes more QE (quantitative easing), which could adversely affect the Dollar, and continued low interest rates. A potential Republican takeover of the House in November’s Congressional elections should be viewed positively by the market as the Republicans will push hard for lower taxes and put the brakes on Obama’s radical left agenda. Gold has been rising steadily for four straight weeks while Silver has recently broken out of a sizeable triangle pattern (very bullish). Gold was up $10 for the week and technically appears to be getting ready to hit new all-time highs, likely sometime in September or October, which coincides with our bullish outlook for the CDNX. This is a very interesting time in the markets with a lot of opportunities to make some serious money.
