The BMO Canadian bank ETF is showing a technical lid at around $21.50. This is the banks third attempt at breaking that level since November. While the market remains long termed bullish – as indicated by the slope and proximity of the 200 day MA, the sector is beginning to look a little tired in the near term. Note the declining Chalkin Moneyflow oscillator on the top pane, and the declining Accumulation/Distribution line on the bottom pane. Both of these indicate that money is leaving this ETF.
Meanwhile, stochastics and RSI (top 2 panes) are overbought and looking like they are about to round over. That’s a sign of potential topping in the sectors momentum. Further, even with a rising MACD line, note the declining MACD bars. That’s a possible warning sign.
Lastly, the comparative strength of the sector vs the TSX (third pane from bottom) has broken below its moving average, suggesting the banks are losing steam vs. the rest of the market.
Seasonally, Canadian and US banks tend to do OK until April. But the banks look like they won’t be outperformers for that time period. Investors who are overweight the big Canadian banks may want to consider taking profits and rotating at least some of their Canadian bank money into sectors with better relative strength.
Excellent analysis of banking sector.
Only bank that I bought for a trade is RY (Royal Bank), based on the strong chart of RY.
In addition to RY, other banks worth a trade, with a good looking daily and weekly charts are TD and CM.