The Canadian Technician

$TSX Down 8 % On The Year 2018-10-24 CT


Another wild ride for the markets! The $TSX closed down 8% on the year which is hardly bullish. This is also occurring while the Bank of Canada just raised interest rates to 1 3/4% today. While the falling stock market was not directly attributable to the Bank of Canada, it sure seemed at odds with the price action. 

It is very clear that the market is losing a lot of technical support. Currently the $TSX is at new closing lows going back 2 years. We are just a few weeks away from the 2-year anniversary of the US Presidential election where the USA started a big rally from. For the Canadian market it looks like a big topping structure that broke the neck line today.

The Canadian market closed below the 2008 highs from ten years ago.

The Energy complex is falling hard. Now the lower lows make the chart bearish. With the present export capacity issues, this is a significant hurdle to improve.

While West Texas may bounce in the low sixties, the  current Canadian price is too low to generate activity in Canada. The chart below represents Canadian oil. CCX.TO is an ETF that tracks Canadian crude. Being close to the 2016 lows is a big problem for Canadian energy stocks.

Moving onto Canadian financial stocks, the financial sector broke a two-year channel two weeks ago. The chart continues to move lower and hit new 52 week lows. The problem with new 52 week lows is they are not found in an uptrend. The momentum failed as expected at the trend line on the PPO. It is now in negative territory. That is a problem. Negative momentum on the PPO indicates the potential for much lower lows. Currently the PPO is still accelerating lower. This is not the setup for a stunning reversal. 

The Canadian Industrial Materials sector broke to new 2 year lows. So the best thing to do here is to avoid the industrial metals and related miners.

I also included a whole section on the Marijuana names. They have been plummeting since legalization day. Currently the stocks are down about 30% from last weeks highs.  This 40 week moving average on the chart below becomes pretty important. 

While there are many great examples of new industry boom and bust, no one industry is more obvious than the Internet of 2000. I draw some analogs and comparisons to AMZN and MSFT in their Y2K surge. That might make the video below very important for exit signs if you are still owning the marijuana names.

The Canadian Technician video shows the massive breakdown on almost every sector chart in Canada.  

Natural Gas has been behaving well but the exploration stocks around Natural Gas are still struggling with the overall market sentiment. Lots of information in here on the commodities and indexes. No new breakouts in currencies. The weekly $CRB chart is at a critical point here. Lithium and rare earth metals, steel and coal, copper and aluminum, gold and silver are all covered here.

This is a short look at the broad market setup and some of the indicators that told us the market was fragile ahead of the drop. Probably worth saving a link for use in future years when the market conditions go weak. 

If you are missing intermarket signals in the market, follow me on Twitter and check out my Vimeo Channel often. Bookmark it for easy access!

Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst,
Author, Stock Charts for Dummies

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Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at specializing in intermarket and commodities analysis. Based in Calgary, he is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the Market Technicians Association (MTA) and the International Federation of Technical Analysts (IFTA).

Greg is also the co-author of Stock Charts for Dummies (Wiley, 2018). Greg joined in 2012 and has be instrumental in helping launch a variety of new blogs and other commentary platforms. Presently, Greg contributes market analysis commentary to The Canadian Technician, Commodities Countdown and Don't Ignore This Chart blogs. Learn More
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