Getting Technical
ByThe S&P 500 currently sits at 919 slightly below the resistance line of 930-940, a level that we have been at several times before. It is possible that a bit of work will be required to get through this point. We are also just below the 200 day moving average, which will also provide some resistance. If the market does breakthrough, on good volume, the resistance line and the 200 day moving average, then this would be short-term bullish and it is possible to see the S&P 500 run to 1,000 over the next two months. At this time, a turn-back at resistance is the favoured scenario.
Interestingly, the market might be forming a reverse head and shoulders pattern. It is too early to tell if this bearish pattern will be fulfilled. If the market gets turned back at the resistance point on strong volume, then the probable scenario would be for the market to hit the left shoulder (LS) November level of 752.
The Canadian market has recently outperformed the U.S. market on the strength of commodities. The commodity matrix is a levered play on global improvement in economic conditions. If the global economy is expanding, investors should expect the Canadian market to outperform. If the global economy is contracting, investors should expect the Canadian market to perform poorly.
