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The SMI stood at 8376 at the time, but recent behaviour led me to believe the index was priming for a healthy breakout. I suggested a break above 8470 be used as the trigger to buy the SMI; an outcome that eventually occurred early this month.
The level at 8470 represented a 100% rise on the SMI from the major low in March 2009 and, predictably, had been providing stubborn resistance for some time. In my last update I suggested a break above this resistance would take the index directly to its next band of percentage resistance at 8674, and this level should be used as the trading target for which to take short-term profits. This trading target was fulfilled some two weeks later when an intraday high of 8684 was achieved. As a consequence, the SMI recommendation now reverts to neutral.
Looking further ahead, however, a strong argument can be made for even higher levels. Ultimately, there lies significant resistance in the band 9390-9520. A break above 8680 is required to trigger this move to a new and higher trading range.
Recommendation: neutral. Buy on a break above 8680. The target then becomes 9520.