CDNX and Gold
The CDNX continued to power higher this past week, jumping 31 points from the previous Friday to close at 1597. The Index has posted 4 consecutive weekly gains (19 trading sessions) and is up 140 points or 9.6% during that time. There have been 8 straight sessions of very strong volume. And over the past 2 months since the early July low of 1343, the CDNX has climbed 19%. Is an imminent pullback in store? The potential for that certainly exists (the CDNX could first go even a little higher, however, to test resistanace at 1625) but it’s important to point out that any correction from current levels right now would only be mild and highly unlikely to exceed 5%. There are two areas of strong technical support – 1550 (right around the 10-day SMA and a strong previous support level) and there’s also massive support just above 1500 at the 20 and 200-day SMA’s of 1515. A pullback to either of these two zones would be a very nice early Christmas gift because we strongly believe the CDNX could really start to explode by late September or early October and hit a new 52-week high before the end of the year. That belief is based on a wide range of technical and fundamental factors that we’ve outlined previously. It appears we’re in the beginning stages of a potentially tremendous run that could stretch into the first several months of next year. The bullish action in the CDNX confirms to us that Gold will reach new all-time highs in the near future, though at present Gold seems to have stalled somewhat and is having difficulty getting through stiff resistance in the $1,260’s. The latest COT report also suggests there are some bullish extremes in Gold at the moment. So, as John pointed out in his article yesterday, the chances of a pullback in Gold have increased but like with the CDNX, we’re not expecting any kind of major correction – just a mild pullback if there is one. Gold should have no problem holding support at $1,200 and in fact the chart shows very strong support around $1,220. So the downside from yesterday’s close of $1,247 appears quite limited.
