The Canadian Technician

Which one is Which? What market are you trading?

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Below are four different markets.

I have standardized the chart style to make the look similar.

I have left the 50 and 200 DMA on the charts.

I have erased the name, value or price of the stock, commodity, currency or index.

Which one is which?

H

W

E

T

What if I told you the first one is an Index, The second is a commodity, the third is a currency, and the fourth is an Index?

The first one is the $HSI - The Hang Seng Index in China, The second one is $WTIC - West Texas Intermediate Crude, The third is the FXE -  euro ETF, and lastly is the $TSX Composite for the Canadian Stock market.

They all started near their respective highs on May 1, made a shelf of some shape into August, then all lost ground within a few weeks of each other...built a basing pattern, and started the push up on October 4.

There is a North American commodity dominated Index, an Asian manufacturing dominated Index, a currency plagued by debt ridden, heavy socialist agenda countries and crude oil in North America.

Individual stocks may have faired better or worse than some of these charts but for the most part, a good 80% have the same traits. Check Suncor, Check TD Bank, check Teck Cominco, and even check RIM. RIM.TO is just missing the rally on the right. In reality it is macro views of what is happening that will change how your stock performs, not their specific earnings. Your stock may be great and rallying on the right, but a fully invested Canadian (or probably anywhere in the world) portfolio has had a rough summer.

The rare exceptions are some stocks like LLL.TO, TOU.TO, TET.TO. They have not behaved the same as the indexes but they have had breathtaking swings of 30% multiple times. The only benefit a stop has given you is to make sure you miss the rally up in those stocks.

It is not easy to hide or outperform. It seems easy to get stopped out either way on trades with the Canadian dollar moving 5% in a week.WOW. We are hardly at the centre of the hurricane, but we are definitely in the force field.

The real question is : What are you investing in? When you buy a canadian oil stock, it probably will follow the banking stocks of Europe higher or lower. Will it continue to follow the rounding top of the 200 DMA on almost every chart? Or will it be a three year rally or a three year slide? Can the stock actually run independent of the market? A few do, but not very many.

As the world's favorite floor manager likes to say..."Stay very, very nimble'. I think I would change it to stay very very humble...

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The Canadian Technician

Good Trading,

 

 

Greg Schnell, CMT

 

 

Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg 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 CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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