As predicted, the CDNX is powering higher this week and the last nine trading days of the month are likely going to be very strong. Numerous technical indicators are pointing to a significant early summer rally as John explains below:
John: The TSX Venture Exchange (CDNX) made a bold move to the upside today with an impressive gain of nearly 20 points (1.33%). The move confirms the turnaround a few days ago at the 1445 level.
Looking at the chart, we see the strong support at 1445 (green horizontal line) and the Bollinger Band channel lines in a pincer movement indicating higher prices are imminent. We can also see that today is the first time the Index has been above the SMA-13 (blue dotted line) since May 3, 2010. This, along with a reversal to the upside in the SMA-20 after a 6-week decline, is a very bullish development.
The next two resistance levels are shown as blue horizontal lines.
Looking at the indicators:
The RSI has broken above the trendline (orange) and has also crossed above the 50% line – very bullish.
The Slow Stochastics has the %K (black line) crossing above the %D (red line) – very bullish.
The Chaikin Money Flow (CMF) indicator shows that buying pressure is getting stronger with the histogram (green) above the zero line.
Outlook: The CDNX responded today to a strengthening in the Gold price. With the Bollinger Bands tightening, it appears a strong sustained move is upon us. The Summer Sun Rally has just begun. Enjoy.
