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trading between 11,800 and 12,500 since. The blue line is interesting as it shows that since the low in October 2011, the index has shown some optimism through rising bottoms (the blue line in an upward slope). It would be expected that the index will continue its sideways trend. The integrity of the rising blue trend line is very important. A break downward through the blue trend line should be considered negative; however, bouncing off of the trend line is a sign that the bulls are gaining strength and the markets could continue upward. The TSX Venture Composite Index chart tells a bit of a different story. This index has been in a continued downward trend since March 2011 with no breakthrough of the downward trend like we witnessed in the TSX chart. In fact, the chart is still trending downward as shown on the longer term red line. There is some optimism with this chart as well. Since the lows in July 2012, the blue trend line shows rising bottoms and the consolidation between 1,200 and 1,300 is very important. This consolidation shows that volatility has diminished and a convincing break either up or down through one of these trend lines will indicate the immediate future of the TSX Venture market. Next, let's take a look at the US markets. For illustrative purposes, we are going to analyze the SPY, which is an ETF based on the S&P 500. This chart shows a very well defined upward sloping channel that started back in February 2011. The chart pattern here, by definition, is a rising wedge as the prices are converging with the bottoms (blue trend line) rising faster that the tops (red trend line). At first glance, many investors mistakenly view the rising wedge as a bullish pattern; however, it is, in fact, a bearish pattern by definition. Generally, wedge patterns are analyzed over a shorter time frame, usually consisting of a couple of months. This pattern has been taking shape since August 2011. Because of the length of the pattern, the convergence is gradual, meaning that the time it is taking to for the pattern to form is slow with very 18 www.resourceworld.com DECEMBER 2012/JANUARY 2013