At the end of September, we noted that the Canadian Venture Composite was testing upside resistance in the 1330 area and a failure there could suggest further weakness, as the global economy slowed. In today’s update we can see that now at 1209 that overhead resistance did in fact prove impenetrable, with potential downside support next in the 1150 range. If that also gives way, the Canadian Venture Index may follow the lead of the Shanghai Composite and revisit its previous cycle low from late 2008, as shown below. This is will be hard on those who have remained bullish and invested in this sector since 2006-07, but it is also quite typical of a secular bear to have stock indices retest prior cycle lows.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.