These charts rolling over here are spectacularly troubling! At the bottom of the list is a 13 year chart of the TSX. It is never good when the MACD resides below zero. So, maybe it's a one day deal, but be aware. In 2008 the SPX spent the entire year under the 200 dma. For Canada, having copper, energy stocks, material stocks and the TSX below the 200 dma is a strong caution. I am transcribing what I see in the charts. Maybe you can see a more optimistic upside.
Both of these charts made 2011 highs and lows the same week. It would appear that the support in June at the black support /resistance line on the XEG chart also caused a bounce on the $TSX. I have denoted this point with green arrows. The two vertical lines are slightly offset from the actual high and low week so viewers can see the limits of the move.
XEG
1) When the RSI goes below 40 on the weekly chart, it is usually the start of a bear market. The rallies will be big, but if institutional investors do not support the sector, that is a flag of weakness. The rallies usually top out under 65. Once it fails at 65 we expect a pullback to the 40 range and look for support there.
2) That black major resistance line is very important at the mid 18's. I would suggest a pullback down to the 16 level and see what happens there.
3) The volume profile is terrible. Both previous moves up had big volume or expanding volume. We went 4 months on declining volume.
4) The MACD getting resistance at the centre line does not bode well. We need to watch the pullback and see if it is graceful and contained or vicious. Serious weakness would be a major blow to the Canadian dollar, the TSX and the energy sector. The low of August 2010 had support at the zero line. In 2011 we made a lower low. Now we are potentially making a lower high at the zero line. This would be very problematic as charts living with a negative MACD are usually going down!
1) RSI stalled below 60
2) Price is struggling to stay above 200 DMA or 40 week ma. This must hold here!
3) Volume profile is exactly what we don't want. Declining volume on the rise in prices.
4) MACD profile is very bearish. See the long view.
TSX LONG VIEW
This is why we would be worried if the MACD can not get back above zero.The red arrows denote a bear market indicator on the RSI. See how the bear market lasts for at least one pullback after the first rise up after the red arrow.
Good Trading,
Greg Schnell, CMT
Here is JJC, it tracks copper. Remember Dr. Copper..It did not hold it's 200 dma.
