Big rally the past couple of days for commodities and equities on hopium flowing from the UK and Europe on more bailout meetings. Officials agree to meet and discuss, meet and discuss… and the risk crowd goes wild. The elephant in the room is the incoming global recession which is still not priced into stock and commodity prices at these levels. Counter trend rallies can be very distracting, especially in the extremes we have seen now for the past 6 months. But these wild moves are precisely what bear markets are made of with the over-arching trend still fully down. Here is the latest chart update from Technician Cory on the Canadian stock market. Year to date, the counter-trend rallies have lasted 3 to 5 weeks with moves of 3 to 9% before reversing course and breaking to a fresh low. We shall see how long this one lasts. It is worth noting that the Canadian dollar is not joining in on the party, moving lower today…weakening global demand will trump government easing efforts and currency traders know it.
Cory’s Chart Corner
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