The Canadian Dollar ($CADUSD) continued its slide today. However, this may have broader implications for commodities as well. The previous times when the Canadian Dollar fell below the 200 DMA (red vertical lines), oil was already proceeding lower but continued down for multiple months.
Crude Oil continues to drift higher. The Texas Tea bubbled over $52 this morning on the December contract as the front month expires tomorrow. I have shown the breakout on this Crude tracking ETF (USO) chart. The USO has negative drift so the peak back in June that it was tracking was not quite $52. You can see this morning's push above $52 looks a little lower on the ETF.
The $TSX has struggled to break through 15000. I have drawn a line at the recent high of 14850. The 20 WMA does a pretty good job of supporting the $TSX. In the zoom box, we can see the last two weeks have been supported by the 20 WMA in blue. If this rolls over and closes below 14500, a test of 14000 is likely. This is near the 40 WMA level and a major support/resistance level around 14000.
One thing we continue to use technical analysis for is the balance between emotion and the market. When the market is roaring, we need to be a part of it. We also need to be aware of when the market is in an exaggerated state. Conversely, when the market feels just horrible, it presents some of the best buying opportunities. Using technicals to help understand where we are in the market extremes is important.
One of the indicators we use at StockCharts is the Bullish Percent Index. For more information on the Bullish Percent Index, click here for the ChartSchool Article. A simple 10 WMA captures most of the trends. One of the concerns now is the sell signal as the $BPTSE has broken below the 10-week moving average (10 WMA).
Gold (GLD) was down hard today. This move was particularly important as GLD broke through support. Through the last eight months, GLD did not outperform the $SPX. The big push to new three-month lows does not suggest any strength showing up yet. Investors probably have some time, probably 2-3 weeks to look for gold names.
The Canadian transportation stocks rolled over on the back of the oil prices falling back in 2014. Most of the Canadian transportation stocks topped out in late 2014 to Mid 2015. Air Canada (AC.TO) was no different.
Currently this chart looks beautiful. The SCTR breaking out to 75 is my favorite signal. The price is breaking out to close the week, the month and the quarter. The volume acceleration is great and the MACD moving above zero on the weekly. Sweet!
Well, ChartCon 2016 is over. I am sitting in the coffee bar with Arthur Hill this morning and we are discussing some of the ChartCon wrap-up details. Arthur provided a great presentation on systematic trading. I presented the SCTR with some little twists for people who might have seen the SCTR presentation before. Reading through the follow-up questions and comments, there are some great ideas on topics for blogs and webinars. I will endeavour to answer some of the feedback I received.
During my SCTR presentation, I commented about Valeant Pharmaceuticals (VRX.TO, VRX). One of the questions related to how the SCTR would help you get out of the stock in time to miss the huge slide that happened because of Hillary Clinton's comments about Valeant. So perhaps, we should discuss that in further detail.
Here is the chart of Valeant in Canada, however, the same price action exists in the US. As StockCharts increased the number of International stocks with an SCTR in 2014, that is when the US ticker symbol (VRX) started having an SCTR. For today's comments, I would like to use the longer time frame on the Canadian ticker.
Notice that for the most of the period shown, Valeant had a very strong SCTR, so this is the type of stock investors like to fall in love with. When it's working stay with it. That sounds like a good rule. As this is a weekly chart and the grid underneath is 3 months per line, this is a big winner for long periods of time. The first chart is simply the major primary uptrend with four smaller multi-quarter uptrends.
So the Fed held rates steady which caused the price of Gold to surge.
Knight Therapeutics (GUD.TO) has been basing nicely over the last few years. Two weeks ago it broke out from the base. Last week it printed a very weak candle so the breakout was looking a little suspect. However, this week, it has continued to climb.
The Relative Strength compared to the $SPX is breaking out to new 52-week highs. With the SCTR breaking back above 75 as the stock breaks above former resistance, this looks pretty attractive. This means that the stock price is moving faster than 86% of the stocks in Canada right now.
Finally, the positive pages are littered with oil and Natural Gas stocks! Not just showing up, but breaking out to new highs. Fred Flinstone was yelling Yabba-Dabba-Doo when this oil was being created in the reservoirs! This looks like another opportunity to be cheering along with Fred.
Seeing nice broad reaction to the inventory data this morning is rewarding in multiple ways. For those following these blogs and webinars over the past couple of months, we have been discussing why it is important that the energy stocks break out now. I will cover that off in full color on the Commodities Countdown Live Webinar 2016-09-08.
Canada keeps inching higher but the progress has been slower lately. In 4 weeks, the $TSX was up 6 whole points from the last look at this chart on August 9th. The Bullish Percent Index is still in very solid breadth territory with 80% of the stocks on a buy signal. On the $TSX chart, you can see that this level has been important in the past as a support resistance level in 2014-2015 around the topping in oil and the Canadian rail stocks. The current $TSX price is also the level at the oil price peak in 2008.