NFTRH; This Chart Says ‘new paradigm coming to macro markets’

In a June 17 update we first noted that the TSX-V/TSX ratio (JX/TSX) was in a daily Diamond consolidation pattern imminently due to break one way or the other. On June 22 we noted the break… and it was upward. In both updates we noted the following…

However, the ratio can still break upward without being set free into a real bull market. That is stern resistance up above. Not until that is clear should we become carefree commodity bulls.

So what now? Do we become “carefree” commodity bulls? JX/TSX has impaled what had appeared to be a big time resistance area and kept on going.

cdnx/tsx

Here is the weekly view. Barring a severe pullback, JX/TSX will close the week in a very important breakout mode above the first stern resistance level. There resides lesser resistance just above and strong resistance well above, as noted.

As for a new paradigm, the old one has been a brutal bear market since 2006. The monthly chart asks me to temper my previous enthusiasm (e.g. the word “carefree”) and simply note that an important breakout – or more accurately, negation of a previous breakdown – is in play.

We should continue to watch other markets like broad commodities and in particular copper, which as we have shown is nearing the upper bound of a declining channel. The motor for the TSX-V has likely been gold stocks like my own GBR.V and MAI.V, which is logical and as it should be as the precious metals tend to be the first mover of any coming inflation phase. But for the TSX-V to really catch a bull it will need participation from other resident sectors.

So with this update I do two things…

  1. Walk back my wording from the previous updates (I am not carefree) and
  2. Note a very positive development for the forward looking inflation trades.