The storm that we have been watching build has finally blown in. As the $TSX rolled down over 150 points today, the carnage is in the energy and materials sectors.
Brent and West Texas Crude have been falling, the commodities like Copper and Gold have been falling, agriculture stocks have been falling, and the summation of what was a subtle drift lower really started to accelerate today across the Commodities space. One of the cleanest charts to display this is the XEG.TO. The SCTR is clearly out of favor and until this starts to perk up, the industry group continues to be one to avoid.
Here is the XMA.TO chart. In late April it broke the major uptrend. Now it is breaking a support resistance line it has been building for a year. The gap down below it really weakens the bullish perspective.
More concerning is the $TSX chart. The RS in purple is almost at the lows set back in 2015 after a period of improvement. The $TSX failed at a previous high after spending months trying to break above. The price action has moved to 6 week lows. The 10 WMA in light blue has rolled over as you can see in the zoom box. A weekly chart needs Friday to finish, but the 10 WMA has been rolling over for 3 weeks already.
There are lots of issues here. I recorded a Canadian Technician video on Tuesday and will be recording a Commodities Countdown video tonight. Between the two blogs, I have been talking about the weakness in Commodities for a while. Hopefully you have been able to take action to protect your portfolio. This looks like a more sustained move down has started now.
Good trading,
Greg Schnell, CMT, MFTA.
