Intermediate trend critical

I have time constraints this week-end. I am actually supposed to be on vacation as is the practice in my part of the country where construction workers "en masse" all leave during the best two weeks of the Canadian summer (best as measured statistically).

Late this week the market generated a third consecutive double top breakout on this short term uptrend. Then Friday we had a bearish resistance line breakout at 13,500 which now provides a new longer term support with a new bullish support line at 13,100. A breakout above the channel resistance of 13,500 would go a long way in convincing me that this is the real deal. If we go back to last March (Black arrow) we had a similar set-up which failed miserably with a subsequent long descent back below 13,000. At that time we had a strong [+3] channel bullish signal and support was channel support at 13,750. The breakdown below that level got us out quickly.


Please click on the graph for a larger chart

The situation now is similar and different:

-1- We are at the beginning of any significant thrust with a [+1] signal. In March the signal was [+3]

-2- In both cases channel support is three boxes down on any 150 points market reversal

-3- In both cases, the market is quite overbought especially at the stock by stock level.

For this week, my most probable scenario is a challenge of the new bullish support line to eliminate the excesses (optimism) of this current move followed by a resumption of this short term uptrend which would be converted into an new intermediary uptrend

We shall see

Pierre Brodeur