I have posted my Canadian Technician Market Review for the Canadian market. You can click the play button to start the video or use the link below this to open a new browser window.
Here is a look at how the Canadian market performed on a relative basis from the February lows of 2016. So one year later, the market has been in a trend almost straight up with very little corrective activity.
I spent a significant portion of time at the start of the webinar to display how the Trump Jump rally ignited the financial stocks and left the others well behind.
The $TSX is weighted 1/3 Financials, 1/3 Materials and Energy, and 1/3 the other 6 sectors combined.
As we got to the November 2, 2016 low off the back of the October Fed Meeting, the market had been declining. The Fed meeting started the rally and the Trump Jump accelerated the rally. Canadian stocks followed. For the entire $TSX, it wasn't a very mixed bag. Using the $TSX average as a benchmark, Financials were clearly the outperformers and nothing else came close. This is using the $TSX as a benchmark.
By unclicking the highlighted $TSX in the top left, you can get an absolute percentage change from November 2. You can see all the growth sectors were positive, and the defensive sectors dramatically underperformed.
This changes the look considerably and I should have pointed this out on the recording. However, the main point is still the same. Financials had the vast majority of the gains and the 'Energy and Materials 1/3' had very little. The final third was actually better with the Industrial and Consumer Discretionary doing ok. That becomes misleading because of what is happening in the past month rather than the past 3.5 months. The majority of the gains in Consumer Discretionary have been in the last month while the Financials are just in line with a lot of the other sectors. We are seeing big improvements in the Healthcare space as the Biotechs surge and some bouncing in the Concordia Health and Valeant charts. Materials got a lift for a few weeks in Gold and then it has gone sideways for the most part. The improvement in the defensive sectors is important.
Zooming in one more time, we see the action over the last week. Materials are getting beaten down, Energy has rallied slightly, but Healthcare and Consumer Discretionary have been surging. A big part of the Energy surge would be the 7% pop in the group from Crescent Point Energy. Canadian Tire has really surged and so has Shopify.
But the Industry group that is moving very well now is Forestry and I talked a lot about looking at the markets more recent history to spot the change in Industry rotation. This is over the last week.
Here the same list sorted by SCTR and we can see that a large portion of the group is above 50 and a lot are above the 75 level.
So this is definitely an emerging area.
There is a lot more information on the recording so I would encourage you to watch it. Arthur Hill also produced a recording over the weekend for members. Martin Pring published a members article on the $USD. If you are finding value is some market commentary as a visitor to the site, there is a significantly larger value found in becoming a member. Click here to access a one-month free trial offer.
Greg Schnell, CMT, MFTA.