The Canadian stock market continues to inch its way to new highs. Amazingly, the oil stocks are holding up while oil falls. The Natural Gas stocks are holding up while Natural Gas falls. The gold stocks are holding up while Gold falls. The miners are holding up while industrial metals fall. So there is a lot of optimism trying to hold the stocks up, while waiting for the commodities to rally. Banks have ticked modestly higher. Defensive sectors have definitely caught a bid. In the very bullish list is the Canadian Technology sector. There are some great looking charts in there.
The $TSX.
There are two very bullish signs on this chart. The price panel has a breakout to new highs. To compliment that, the PPO broke out above the trend line. That gives me some hope that this can continue.
One of the problems here is that very few stocks are hitting new highs even as the market does. In the chart below, The lower panel shows the number of new highs minus new lows. Even as we hit new highs on the index, the net number of new highs is barely zero. The second thing to note is the lower highs on the net new highs since May 2018. As the market goes higher, we get less and less new highs.
Looking left on the chart, we can see how the real bull market phase of 2016 looked and the down draft in late 2015.
The market can make little higher highs without the net new highs surging, but a prolonged advance needs this to kick in. Obviously when the indicator is making lower highs as the market goes up, this is a divergence suggesting caution. In 2015 when the indicator was this weak, the market was already falling for months.
Options expiration is Friday. The last five options expirations during earnings have led to flat or declining markets on the $SPX for the next month or so. Notice the April 2018 surge in Canada, compared to the $SPX. This is one of the few times the Canadian market has outperformed the US market.
This week's video discusses a lot of the sectors and specifically reviews the technology sector stocks.
Below is the Commodities Countdown video that walks through the decimation going on in a lot of the commodities right now.
The Final Bar recording for Thursday July 12th contains information on the potential for rollover or breakout in the $USD. I cover off bonds as well. All of these markets are at very critical technical locations. If the USD is going to soar and create a bunch of trend changes on the other charts, you'll want to see the setups in advance. That is what the video covers off.
If you are missing intermarket signals in the market, follow me on Twitter and check out my Vimeo Channel often. Bookmark it for easy access!
Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
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