Thank you for joining us in a weekly technical look at the mid-cap oriented INK Canadian Insider (CIN) Index. In our last review, we formulated that a summer bottom was being hammered out by the Index. After all, the INK CIN hadn't traded meaningfully below 1280 since April. However, as the week began, that idea quickly ran off the rails as Canadian indices tumbled on reports that the government of Saudi Arabia had ordered its institutions to dump Canadian stocks after receiving Canadian criticism for their arrest of human rights activists. The Index fell further as the week continued, including a 1% drop on Friday when one of its constituents, AutoCanada, took a 27% plunge (impacting the Index 0.46%). By week's end, the INK CIN dropped 21.51 points or 1.7% and closed at a multi-month low of 1269.28.
Our short-term momentum indicator RSI fell nearly 14 points or 32% to 34.42. And our long-term momentum indicator, MACD, dropped 1.65 points to -0.65.
Support is at 1269 (lower Bollinger band) and 1263. Resistance is at 1279 and 1288.
Once again, the Index finds itself knocked down to its lower Bollinger band, and that suggests it could drop a bit further before generating a strong bounce. If there is one positive in these summer doldrums, it's that Canadian stocks and commodities are heavily out of favour and ripe for a prolonged period of outperformance. In fact, hedge funds are at significant extremes in terms of shorting gold, copper, and platinum, and that bodes well for contrarians and markets leveraged to commodities.
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