The Canadian Junior Index (TSX-V) is in a suspect pattern while testing its 50 day moving average
The Canadian Junior Index, AKA da ‘V’, replete with viable but speculative stocks and scams alike, is in a not so attractive pattern as it nests on short-term support and the SMA 50. It’s an important point, right here, lest Junior resource speculators be subjected to a gap filling exercise.
A fill of the upper gap can happen with a ‘higher low’, and thus the rally, still intact. A fill of the lower gap would obviously come after a broken play.
The longer-term weekly chart of da ‘V’ shows the critical nature of current support. In other words, it would be best not to go on a gap filling expedition because the index has barely even begun to undo the damage of the last 3 years. While the pattern above is pretty ugly, there is positive divergence in weekly RSI, which made a higher low as da ‘V’ made its lower low in November, and the thing is at support, after all.
On a related note, the ratio of the Canadian Junior index (TSX-V) to Canadian Senior index (TSX) is often a good indicator about the greater inflation trades. As with many other macro indicators, however, TSX-V/TSX thus far refuses to show its hand, slithering along in a pattern that could just as easily resolve upward (as a bottoming pattern) or down (as a normal consolidation of the downtrend). Tough market… eh?
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