The TSX is in the process of testing its October lows. Yesterdays positive move (and, so far, today’s) caused a ripple of movement on the near termed momentum indicators to the upside. Its far too early to be excited about the prospects of our home and native land’s index yet, but the TSX may, should Mondays low hold, attempt to form a double bottom shortly. Here’s the nitty gritty on the short termed indicators that I watch:
- The money flow oscillator on the top pane (which is an RSI of money flow) is bearish- more importantly, the longer termed cumulative money flow line has also deteriorated (bottom pane)
- Stochastics is oversold but NOT hooking up
- RSI is oversold and is showing early signs of hooking up.
- MACD histogram is moving up, but its MA’s are not
- Comparative strength vs. the S&P500 is declining (no kidding!) and remains below its 20 day MA. However, it is on the verge of breaking that line – that may be a bullish omen.
The seasonal factors are typically positive from around mid December and into January. The above signals are rather mixed, so it would appear that the TSX is at a “make it or break it” moment. Much depends on the energy sector of course, as well as our banks. Crude shows no sign of bottoming (nat gas is somewhat more positive, as seen by support at $3.60 on the chart below). The banks, which are another key TSX index component, showed a similar test of their October lows yesterday. Lets see what the next few days deliver for the TSX. Confirmation of support at the October lows over a few days will be a potential buy signal.
Keith on BNN
I’m on MarketCall this Friday December 19th at 6:00PM. Phone in with your questions on technical analysis during the show. CALL TOLL-FREE 1-855-326-6266. Or email your questions ahead of time (specify they are for me) to [email protected]