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Technically, the TSE 60’s recent chart strength reflects the action in crude and precious metals, with consolidation showing in the middle of its trading band on a Point and Figure basis. In the chart below, a powerful spread triple-top breakout can be seen at the 675 level:
Under this form of technical analysis, strong charts in definitive up trends tend to see their corrections limited to action around these points rather than becoming dramatically oversold. In the case of the TSE 60 the midway pointing its own expected trading band is now in the 640 area, suggesting that risk in this index is still minimal despite its recent return to strength. The last 2 years have witnessed Canadian market rallies in the late summer and early fall. In the past, I have also noted the close correlation between the energy market pricing of oil and gas with respect to the hurricane season, and energy’s typical signs of strength as Summer ages. So, as the Middle East risk premium could well be replaced (or compounded, depending on how events unfold over there) with the hurricane premium in the coming months, there remain no convincing signs the powerful move in energy and materials has ended just yet.
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INFORMATION Over his 20-year investment career, Mr. Zaro has become a highly-regarded technical analyst who runs private client portfolios at Delta Global. He recently served as the Managing Director of Granite Wealth Management outside of Boston and spent nearly 15 years prior as a Vice President at Gage Wiley & Co. His current firm is full-service, but specializes in providing international market access as well as alternative investment strategies. In addition to U.S. market coverage, Mr. Zaro applies his expertise in technical analysis to stocks and stock markets around the globe. The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
