CI may have put in a top.

At 11.00 a.m., the CI is down 2.71 points to 961.13. A close study of the chart below has convinced me that the CI is likely to have made a top on Monday & yesterday's market action could be the beginning of a reversal. The CI is currently at a level quite similar to what it was on May 10.

On May 10, the CI had just come off a high of 970, without strong signs that there is any trouble in the horizon other than a slight "hooking-up" of the lower band of the Bollinger Bands. At that point, the CI was still way above its 8-, 10- & 20-day MA. And, the MACD had yet to do a negative crossover. All these are exactly what we have today. So, we can’t say the market has put in a confirmed top but if it follows the same path as before, we may be at the beginning of the reversal.

I have to say that the correction, if it ever happens, may not be as severe as the May & June sell-off. I believe that the likely target for this correction, if it happens, may be around 925-930 levels, given by the tentative uptrend line, AA (see the chart below).

















Chart: CI's daily chart as at Sep 5