Talks of QE2 (WSJ: QE2 or Titanic and Econbrowser: Why is the Fed doing this?) and earnings season are pushing the market higher and higher. Gold is still pushing to new all time high and the dollar is breaking to new lows. The TSX, in particular, is testing 12,700 today. 13,000 is just around the corner. 13,000 price level is the line in the sand for the commodity-heavy TSX for three obvious reasons.
- It marks the breakdown support level back in the 2008 crash.
- It is the bottom of a prolonged congestion zone in much of 2007 and 2008 before that crash.
- And most importantly, #1 and #2 are very easy to spot on the chart (potentially self-fulfilling).
It is likely that the TSX will be reaching 13,000 shortly in this earnings season. However, what happens afterward is anyone's guess. At this point, I am neither long or short for the long term. The reward/risk isn't good for going long at this point with that much uncertainty. And the threat of QE2 and earnings release isn't good for going short either. I am watching the forex market closely for signs of a direction as that is a driver of the equity market these days.
[caption id="" align="aligncenter" width="570" caption="S&P TSX"][/caption] [caption id="" align="aligncenter" width="570" caption="CBOE Market Volatility Index (VIX) vs. inverse S&P500"]1[/caption]