INK Canadian Insider Index sheds 2% but holds key 2016 winter low

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Thank you for joining us in a weekly technical look at the mid-cap oriented INK Canadian Insider (CIN) Index. Last week, the Index had a tough time generating any upward movement and slid a further 23.3 points or 2% to 1083.55 making for a 6% loss in the last three weeks.

MACD fell -0.1 point to -2.7 for its second down week in a row. RSI also dropped moving down 2.4 points from 30.1 to 28.77. Some good news is that with RSI around the 28-30 range, the momentum indicator finds itself at least 'in the ballpark' of where we often see equities bottom.

Support is now at 1069 and also 1079 which marked the Winter (intraday) low on November 14th, 2016. If there is an ember of hope for the bulls, it is that the Index held that level last week on a closing basis and will do so again next week.

Resistance is now at 1100 and 1110.

The INK Canadian Insider Index has reached a new 2018 low, and investors remain pessimistic. However, there remain bullish signs buried under the ashes. For one thing, compelling positive technical divergences remain in place. Indeed, RSI has made a series of higher lows since October 10th even as the price of the Index has made new lows. That gives us a non-confirmation of weakness by our momentum indicators. As mentioned previously, this is not a signal for an immediate turnaround but does remain a reliable indicator of an eventual reversal and trend change.

Secondly, the price of copper which has been a leading indicator for the INK CIN (and other markets), remains 10% above its August lows (albeit, down 1% last week) and appears to be consolidating and forming a bullish saucer pattern.

Thirdly, while investors are feeling the effects of the tax selling season, influential US markets are hammering out what I see as a 'W' reversal pattern over the past few weeks. Finally, two CNBC financial commentators (notorious for being wrong-footed at tops and bottoms) publicly turning bearish in the last two weeks is a further positive sign, sentiment-wise. While I could see the Index put in another couple of weeks of grinding action, I remain contrarian bullish and on the lookout for bargain-priced stocks with bullish insider sentiment.

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