The industrial metals stocks have ratcheted their way to the top of the SCTR rankings. They appear to be continuing to accelerate. The Capped Materials ETF (XMA.TO) in Canada broke out to 3-month highs Tuesday. The Relative Strength Ratio in purple is just about at 3-month highs as well.
The Canadian Oil and Gas Exploration stocks have fallen off the luster list. With only 17 of them above 75% (top Quartile) on the SCTR ranking, it is pretty dismal. This list only looks at TSX listings, above $1. This list is sorted based on the StockCharts Technical Ranking (SCTR) which ranks a stocks price movement compared to everything on the $TSX over the last 200 trading days. A stock with an SCTR of 80% is performing better than 80% of the stocks in the $TSX. I have also set the % Change indicator to one month. As you can see, even though oil is holding up around $50, these stocks are falling away for the most part. Natural Gas has also drifted back from the highs but Encana is holding up well.
Two weeks ago, the $TSX made a big push up to new 52 week highs. The intraday high was 15621. The candles around the high have some interesting traits that should be noted as this might mark a more meaningful top for the next few weeks or months. The market surged above the previous levels of 15400 shown with a red line. The original breakout day saw the $TSX close near the highs of the candle. The final high candle I am referring to has an orange arrow next to it. We can see it pushed higher and closed in the middle of the range which is perfectly normal. The next day, the market fell away all day, and the same on the following day. This makes the high look unsupported as the market quickly retreated from those levels. While a fundamental analyst might place little weight on this particular group of candles, more information makes this failure to hold the highs significant.
The auto sector has been slowly climbing a wall of worry. Donald Trump adding his 140 characters has made everyone look at the auto charts the last few days! But more importantly, the investors are already rolling on these wheels.
First of all, the auto sector was one of the worst performing sectors last year. In a big up year (2016) for the markets, the car guys were not being bought. Here is a look across the worst performing industry groups in the US markets. The Autos were down 4.56% in the '% change' column. Automobile parts (-1.71%) and tires (-5.75%) were also in the "poor performers" industry list in 2016.
There has been some rotation into more defensive stocks this week, so I thought I would highlight Saputo this week. The chart looks set to deliver more solid gains. Saputo has a big uptrend going, but recently pulled back for about 6 weeks. When investors jumped into Financials in November, they were selling Saputo by looking at the chart. Friday price action is interesting. It gapped open, shot up, then traded near the lows to close out the week. All of the other indicators are giving positive signals. The MACD is turning up, the SCTR is pushing back above 75, the volume doubled on the breakout, and the relative strength downtrend apeears to be breaking.
Well, another year of Fed meetings and another December 0.25% rate increase with predictions for a more aggressive pace next year. So in a day where we got what we expected why did the market wobble this time? At the last Fed meeting (October), we got what we expected and it marked the November low in the markets and the US Dollar.
The market has been on a tremendous run. In Canada, the Energy sector has picked up the leadership and surged again today. The RSI suggests we are getting close to an extreme. This can still run for many months, but you need to look for selling opportunities to lock in profits and rotate into something else that might have some big upside.
The Canadian Energy sector got a major boost on Tuesday. The Canadian government allowed two existing pipelines to be upgraded but blocked the new pipe proposal from Enbridge. This announcement coincided with the OPEC meeting. This has created a significant move in the Canadian energy sector stocks.