The Canadian Financial Sector ($SPTFS) continues to hover in the middle of the trading range for the last year. It is currently trading where it was last July. In the Month of May, the financial stocks have started to underperform the $SPX which I use as a reference point because the S&P 500 has so many industry groups to stabilize it. The $TSX is 1/3 banking, so as the Canadian banks go, the $TSX follows closely. The other 2/3 are energy and materials, which are both in terrible shape. So showing banking outperforming those two groups would not help us. Using the $SPX as the pivot point does a better job.
Here is a list of the Canadian Financial stocks I track. Only one has an SCTR ranking above 75% which makes the group pretty weak. The red/green bars illustrating the changes over the past week look ok, with TD,RY,BMO,NA all gaining between 1- 2 % this week.
The bottom line is we are still looking for inertia to move the $TSX back above the resistance levels I talked about in the Webinar on Thursday May 21, 2015. If you follow my work, I went into a significant amount of detail on why I use the chart settings I do, why I show the SPURS in Purple, the SCTR rankings and the MACD. I spent a lot of time working through the SCTR and what it means with a baseball analogy. Below is a look at the excel spreadsheet that gave the baseball teams an SCTR ranking. You can see our only Canadian team doesn't look playoff bound with the current SCTR ranking placing them in the bottom 30% of the league. Unfortunately, CIBC or CM has the same SCTR ranking at 27% on the table above. Hopefully that helps demonstrate the power of the SCTR. Looking at one number, you can tell how an individual stock is doing compared to the other stocks inside the group, which in this case are the $TSX listed stocks. If you are not familiar with SCTR yet, this is one of the most important webinars for you to watch.
Have a good weekend. To all our American readers, enjoy your Holiday Monday. To the Canadians, we'll see you in the trading trenches on Monday!
Have a nice weekend everybody. Watch the webinar if you missed it live. Webinar Link May 21, 2015
Good trading,
Greg Schnell, CMT
