Technical Overview by Nicholas Winton, Hedgehog Trader and @HedgehogTrader on Twitter
Thank you for joining us in a weekly technical look at the mid-cap oriented INK Canadian Insider (CIN) Index. In our last update, we theorized the INK CIN Index would find a bottom around the 900 level since it based in that area for a few months during 2013. As it turns out, the Index did use this level as a springboard, after completing a capitulatory bottom which saw it fall as low as 885 intraday on January 20th, piercing below its lower Bollinger band. Later the same day, the chart completed a bullish hammer pattern, when the CIN Index closed the day with a small gain after making an impressive reversal 2.4% above its lows. We then saw two more positive days of gains, including Friday where the index bullishly 'gapped up' at the open and closed strongly near its highs.
And it follows that our momentum indicators did a swift about-face. For one thing, RSI surged and has more than doubled from its 21 low to its current 43 reading (bulls would like to see RSI at 50 or higher for this rally to maintain forward momentum). And MACD has begun to climb, rising 10% from its -20.56 low to its current reading of -18.6.
In our chart below, we've used blue circles to identify the CIN Index's recent reversal as well as the one on August 24th which kicked off a 2-month rally into late-October. In our last blog, we also mentioned that such panic-driven or emotionally-charged declines often see equally powerful rebounds, and it looks like we may be in the early stages of such a rally. As you might recall, from the Aug 24th panic low, the INK CIN Index rallied over 10% in just a few weeks.
It will be interesting to see if we get a comparable rebound as we exit January and move into February. That said, there is a cluster of resistance points all the way up to 975 that the Index needs to hurdle in order for it to have a chance at matching or beating its powerful late August snap-back. But the Index is off to a solid start and has already risen 5.7% above its January lows.
Major support is 900. Minor support is 915. Next major resistance is 960, minor resistance is 950.
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