I mentioned last week that the TSX was setting up for a correction or pause – here’s the blog: http://www.valuetrend.ca/?p=2600
The charts didn’t lie, as we’re now seeing substantial underperformance by that index. Potential downside target for the TSX 300 lies around the 13,000 mark. Its already broken the 50 day MA.
The S&P 500 too has been weakening, although it has been a much stronger market over the past week. Potential downside for the S&P 500 would be around 1770 (50 day MA-area) or about 1700 in a worse-case scenario (trend line intersection and resistance formed over the summer, which becomes new support).
Both the TSX and the S&P 500 will likely be supported coming into the holiday season, a.k.a. the infamous “Santa Rally” that begins in the latter half of December and carries forth until the first week of January. The Nasdaq, according to our pal Brooke Thackray, tends to extend the rally a bit longer – typically until the end of January. So—look to this correction as likely to be short and shallow, with an eye on adding to positions if you are not fully invested.
Keith on BNN
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