On one hand we have the potential for a right shoulder being drawn day by day. The fact that the market is not going up in a straight line is a very good situation. We could see a few columns of "X" and "O" before the breakout occurs.
On the other hand, we are still under the influence of the long term resistance line which currently resides at 12,150. There are four (4) levels of support towards the bearish scenario:
-1- Channel support at 11,900
-2- The previous double top at 11,800 which is now support
-3- The short term trendline (weak) at 11,500
-4- and the double bottom at 11,450
At this point, we only have a higher high (12,250 vs 11,800) and we now require a higher low (11,450 and ?) for the bullish scenario to receive a higher probability. For the aggressive trader, a reversal into a column of "X" any time before we break the low (11,450) would be a signal to add to long positions as the trend would now be up.
Please click on the image for a larger chart
As for me, as we enter the second week of December, I usually reduce my portfolio exposure to a minimum in order to enjoy a X-mas holiday which usually extends to the end of the first week of January. As we approached and then hit the bearish resistance line, I "exited on resistance" and my cash position is above 85% of my portfolio. I will come back to this blog in the second week of January.
May I wish a happy Xmas and New Year to all my readers.
Pierre Brodeur
P.S.: I would like to bring to your attention one stock which had an impressive series technical events in December.
Please click on the image for a larger chart
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