The Canadian mining stocks appear ready to roll over.
It is quite surprising that they've not been able to rally given the recent weakness in the US Dollar. With the move down in the US dollar, we would've expected the value of the metals and the associated miners to move up but that just isn't happening. Check out this chart to see what I mean:
This hardly looks like a bull run off the June lows. While the weekly bars have moved a little higher, they have not moved up enough to turn the Elder Impulse System from blue to green, nor has the Full Stochastic line moved up. The MACD and Ultimate Oscillatior are slowly improving, but the RSI and relative strength lines at the top of the chart have gone sideways. If Canadian miners were really rallying, the weekly technical signals would be much more positive.
For all those reasons, caution appears warranted. A case can even be made that the 750 level makes a nice head/shoulders neckline on a long term chart!
Greg Schnell, CMT
