The Canadian Technician

Energy Stocks Continue To Be Added To Canada's Top Performers

The momentum continues to surge towards the energy sector and now the oil services sector. If you have not seen the change in momentum, I'll be hosting a Commodities Countdown webinar 2016-04-28 and you can click on this link to register. Here are a few more stocks adding to the momentum.

ARC Resources (ARX.TO) continues to press to the upside. After breaking to new 6-month highs, it has paused. With the momentum across the industry, this probably has more to run.

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If You Like Oil And Gas, This Is A Must Read

Oil and Gas stocks are breaking out from the big 6-month bases they have been building. Some of the juniors are moving faster than the majors. During the Canadian Technician Webinar 2016-04-19, I spent the vast majority of it going through Oil and Gas stocks. So here is a link to the webinar.

"The Canadian Technician LIVE!" with Greg Schnell - 2016-04-19 17:00 from StockCharts.com on Vimeo.

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The Oil Service Stocks Perk Up On The Failure In Doha

After another OPEC /non-OPEC meeting where nothing was concluded, the initial reaction was a plunge in oil. On Monday, after the market opened, oil actually held in pretty well and forced early short positions underwater.

Today was a good day to do another quick look at the oil services stocks. There are excellent bases that look pretty solid. Breakouts from these bases would be the first signs of spring in a 2-year nightmare.

First of all is Precision Drilling. From a 2014 high of $14.84, the $6.30 level looks interesting.

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10 Canadian REIT's Continue To Deliver Yield And Capital

There is a collection of REIT's that are performing in Canada. Here is a look at a few of them. As we struggle to find yield everywhere, this is a list of some nice looking charts that pay a monthly dividend and have some potential for capital growth as well. Some need to go on a watchlist for entry, others look attractive here.

Killam (KMP/UN.TO) still pays a 5% yield even after running for a couple of months above the old highs. A little concerned that the relative strength trend in purple is breaking. This might set up a better buy point a little lower.

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Interesting Charts For Interesting Times

With the market recently surging, it is difficult to be bearish when the US Market makes higher highs. The $TSX made its highs on March 17th while oil made its high on March 18th, first thing in the morning. We've traded between 13650 and 13250 since. At the time of writing, we are at 13500.

Currently, the themes of the market have all relaxed. The precious metals trade made highs in early March and we have not been able to make progress since. Oil is near 2-week lows but a lot of traders are looking for potential support at $35. The Canadian banks were making new highs last week and a few are extending those highs. When I look through the leadership areas, I did not see any new emerging trends, but I did find some interesting charts. Aecon and SNC are both rising as the 'throw money at infrastructure' idea received capital in the budget. 

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Fundamental Investors Are So Bullish, Is This Another Pivot Point For Technicians?

During The Canadian Technician 20160322 Webinar, I covered off some of the signals that were leaning to a new bull market. While I am still in bear camp mode, I did discuss some powerful charts that suggest a transition to a new bull market is very close.

The symptom of a bear market rally is that it seems to suck you in as you believe the worst is over.  Just when you start to feel the trouble is over, it reverses into a downward slide. Then at the extreme lows, the pain is so real, you don't want to jump back in.

Let's look back at some of the moves in the market. Here is an article from July 14th marked by a red arrow. Why Technicians Are Worried And Fundamentalists Are Not. Then on October 3rd, we talked about the fundamental and technical approaches to the market. I covered this off in one of the most popular articles I have written. For fundamentalists, the bull market resumes. For technicians, this is a very important chapter. While the $SPX rallied into November, the $TSX rolled over a meager 5 days later in October and continued the bear market trend. The $SPX resumed a bear market trend in November without making new highs as well. The technicians were right to be concerned. Then in December, on the red arrow, an article about Three Topping Structures was pretty good timing. 

In January, the indicators had dropped to the levels where extreme lows are created.  While there was a retest of the lows in February on the US indexes, the Canadian markets did not test those lows. You can see this in the two charts below. It was a nice time to enter the market from a profit perspective but difficult from an optimism perspective as the plummeting market rattled the nerves of the investor. In my own investing, I started putting capital to work in mid-January and had some moves whip me around. It is hard to get easy entries in volatile markets. Some of the industries that moved off their lows made substantial increases. A bear market condition of lower highs and lower lows suggested positioning in defensive sectors. The oversold areas of the market had substantial bounces for a trade. This brings us to the current yellow arrow.

Now in late March, both of these charts have rallied off the lows and have swung the indexes to the point that they could be starting new bull markets. My target for this rally was between 2020-2030 on the $SPX. On the $TSX, my target was 13000 with a potential of 13500 which was the 200 DMA. We have exceeded that.

Here is the chart of the $TSX with the same time frame settings. 

 

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Canadian Markets Struggle Where They Should Struggle

On Tuesday, during the Canadian Technician Webinar 20160308, I reviewed the various Canadian Sectors.

 I demonstrated the various markets using the RSI indicator on weekly charts. This generated some great questions. While the RSI is used by some on a shorter time frame, I like using the RSI on the weekly time frame.

For the $TSX, here is the chart. Notice the RSI is trapped under 60. The red arrows indicate a weak RSI below 40, which indicates a bear market signal. We are currently testing horizontal support/resistance marked by the red line as well as the 40 WMA. A down-trending 40 WMA is bearish and a test at that level is important in my work. The weekly MACD has not made a higher low yet and the long cycle Full Stochastics are below 50. For those following the webinars, we were getting long at the January lows. Now this appears to me to be near the end of the move higher.

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Canadian Oil Stocks Reach Resistance

This is the moment we've all been waiting for. Stocks finally pushing back up against their 200 DMA average. Some are even breaking above. More importantly for Canadians, the Canadian oil companies are pushing up against previous-high-resistance levels. The next few weeks will decide if this recent rally has finally marked the lows in the energy stocks and put the downtrends behind us.

An example would be CNRL. (CNQ.TO). This is really a major decision point for the investor. The Relative Strength in Purple has broken out to new 8-month highs. The SCTR has finally pushed well above 75. We can see price traded in a small range today as it continues to try and push through resistance.

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