Up, down, up, down. This past week it was down, as the TSX Composite lost 2.5 per cent. With the exception of healthcare, all sub-indices were down, including gold. Gold being down was a surprise considering the metals closed higher on the week.

Gold and materials remain the only places to be. Utilities are continuing to roll over but we don’t as yet have a stand aside signal.

Many are still calling this a bottom. But we have little evidence that we have made a bottom. Still we did not see new lows, so the small rebound that started a couple of weeks ago is still in play despite the drop this week.

The TSX Composite closed up 3.3 per cent this past week and 12 of the 14 sub-sectors were up. The only two that fell were Consumer Staples and Gold. Despite the gains no buy signals were seen, and of course no new lows were seen. But how much further this rally has to go is questionable. The sub-indices and the TSX Composite were merely rallying to test breakdown lines or key moving averages, such as the 50-day MA on the dailies and the 13-week MA on the weeklies. It brought some fast-moving indicators off their bottoms, but others such as the slower-moving MACD indicator barely budged.

With the rally into key MAs we expect the market to fail at least this first attempt at breaking higher. We suspect the market is in the throes of making some sort of ABC correction and we may have completed the A wave up this past week. There will be a pull back and then we rally one more time, putting in slightly higher or slightly lower highs before we resume our downtrend to the lows we continue to look for in March or no later than April. Possible dates for lows are around March 21, April 6 and April 21.

We continue to believe that the TSX Composite will test the four-year MA near 11,000 in the next wave down. That remains a minimum target from the double top pattern. Upside resistance on the TSX is near 13,525 and 13,625. That should be the max for any rally here. To the downside the [ read more... ]