This year, the heavyweights of the TSX—financials and commodities—have been underperforming due to strong domestic and international economic headwinds. Prab Sagoo, associate director at Nasdaq Advisory Services, explains in his weekly commentary where investors have been turning.

Read: Rough Q2 for TSX and active managers

  • On a year-to-date basis, healthcare is +40%, tech is +7%, consumer staples is +11% and consumer discretionary is +8%.
  • These sectors, which only account for a fraction of the TSX, have been propping up the index as banks, energy and materials stocks continue to struggle.
  • However, in the last few sessions we’ve seen investor fatigue grow in these sectors. Healthcare lost over 4%, tech is down by over 2% and consumer staples is off by more than 2%. Meanwhile, the TSX as a whole is down by just over 1%.
  • New data has also shown that average bearish bets (shorts) increased on healthcare and IT names by more than 20% in late July.
  • If these recent pillars of TSX strength continue to struggle in the typically slower summer months, we could see the index decline further and once again test the 14,000 lows we touched in late July.

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