During The Canadian Technician 20160322 Webinar, I covered off some of the signals that were leaning to a new bull market. While I am still in bear camp mode, I did discuss some powerful charts that suggest a transition to a new bull market is very close.
The symptom of a bear market rally is that it seems to suck you in as you believe the worst is over. Just when you start to feel the trouble is over, it reverses into a downward slide. Then at the extreme lows, the pain is so real, you don't want to jump back in.
Let's look back at some of the moves in the market. Here is an article from July 14th marked by a red arrow. Why Technicians Are Worried And Fundamentalists Are Not. Then on October 3rd, we talked about the fundamental and technical approaches to the market. I covered this off in one of the most popular articles I have written. For fundamentalists, the bull market resumes. For technicians, this is a very important chapter. While the $SPX rallied into November, the $TSX rolled over a meager 5 days later in October and continued the bear market trend. The $SPX resumed a bear market trend in November without making new highs as well. The technicians were right to be concerned. Then in December, on the red arrow, an article about Three Topping Structures was pretty good timing.
In January, the indicators had dropped to the levels where extreme lows are created. While there was a retest of the lows in February on the US indexes, the Canadian markets did not test those lows. You can see this in the two charts below. It was a nice time to enter the market from a profit perspective but difficult from an optimism perspective as the plummeting market rattled the nerves of the investor. In my own investing, I started putting capital to work in mid-January and had some moves whip me around. It is hard to get easy entries in volatile markets. Some of the industries that moved off their lows made substantial increases. A bear market condition of lower highs and lower lows suggested positioning in defensive sectors. The oversold areas of the market had substantial bounces for a trade. This brings us to the current yellow arrow.
Now in late March, both of these charts have rallied off the lows and have swung the indexes to the point that they could be starting new bull markets. My target for this rally was between 2020-2030 on the $SPX. On the $TSX, my target was 13000 with a potential of 13500 which was the 200 DMA. We have exceeded that.
Here is the chart of the $TSX with the same time frame settings.
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