One chart that is troubling me is the Toronto Composite. I know I’ve been a poster boy for the bulls lately but at least my message has been constant. Late last week I went to a more cautious stance as I feel we need to digest the gains and the macro news coming this week.

There is a very significant down-sloping trend-line on the TSX that could spell disaster for this rally, which has been considerably weaker than the Dow’s advance. The RSI could find a top near 60 and the TRIX is already at it’s highest level this year. Actually, the fact that the RSI is barely above 50 and already rolling over is telling us something with this market.

I guess the point of this post is to be careful this week. I’ll be watching to see if volatility comes back into the market, as we’ve seen a deflating move with the VXX and VIX lately. We want to see a sharp, quick pullback that’s scary…but not too scary, to start initiating some long positions as long as my timing signal remains bullish on both short and long term time-frames.

Hopefully that isn’t too confusing.

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