Strengthening INK Canadian Insider Index Pushes Upper Boundaries of Breakout Box

Thank you for joining us in a weekly technical look at the mid-cap oriented INK Canadian Insider (CIN) Index.  Last week, the INK CIN Index provided sparks of excitement as it surged as high as 1025.28 on Wednesday, and seemed ready to break free from its month-long sideways consolidation. However, the Index could not maintain its altitude and retreated slightly to close the week at 1013.45.  But even then, the Index managed to add 5 points on the week.   

It's interesting to note that on three straight days last week the Index crossed above 1020 but was unable to close above that level. Though, this is not necessarily ominous news, for we've seen the Index require multiple attempts to break through resistance levels (including its most recent visits to 960 and 1000 both of which took 5 or 6 attempts in a row) before finally achieving success.

The Index's chart and technicals are in fact looking quite bullish – due in no small part to its improving momentum readings. Indeed, for the second week in a row relative strength remains at a robust level in the low 60s. Why is this important? It's worth recalling that until late February, RSI rarely spent more than a few days at a time above 50. So clearly, the character of trading in the INK CIN Index has transformed into one that is bullish - for since that late February surge began, RSI has never fallen below that critical 50 level.  

MACD the momentum indicator which typically reacts more slowly and gradually than RSI, actually rose 1.5 points from 5.66 to 7.16, a fairly significant percentage increase of 26.5%.   

1013-1015 is first resistance (where the Index topped out in late March) and 1020-1025 is the second overhead resistance.  980 is major support, while 960 is minor support.

It will be interesting to see if the Index can finally break free from the 1020s this week – but if not, the increasingly bullish nature of this multi-month rally suggests a breakout is almost certainly, even if investors are forced to wait.

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