On March 21 we had an update noting that the TSX-V (CDNX) had tentatively taken out initial resistance (now support along with the SMA 50 at 856).
Today’s attempt at the down-trending SMA 200 is a reasonable objective off of that resistance breakout.
But until some kind of divergence vs. the senior TSX comes in I want to have some patience with my speculative ‘resources’ trades. For example, if the CDNX/TSX ratio were dropping here I’d have an abundance of caution, considering that the nominal ‘V’ above is nearing the down-trending SMA 200.
The ratio above tends to correlate with the CRB index historically, although it has not done that over the last year. To review, this is either an ongoing negative divergence to the inflation or, if da ‘V’ and its ratio to TSX start to bull it could indicate a dynamic ending phase of the inflation trades.
But there are two scenarios here. One being that potential speculative blow off party and the other being a negative divergence that proves negative after much time has gone by. Notice for example how the ratio diverged CRB to the downside for about 2 years before everything crashed in 2008. Oil was driving CRB up back then too.
Just an fyi to be respected for both of its potentials. In my opinion, they will both end in a crash. But the spec blow off scenario could include a lot of bullish excitement first.
