Is the TSX topping out?

Currently, there are more than 190 TSX constituents operating above their 50-day moving averages, says Prab Sagoo, associate director at Nasdaq Advisory Services, in his weekly market commentary.

Read: Play it safe with market-neutral strategies

So, is the TSX topping once again? Sagoo notes that in October 2015, when the the TSX last rebounded sharply and then declined, there were fewer consituents trading at such high values. At that time, the exchange fell to the 11,600 level.

Read: Red flags for equity investors

More highlights

• Expect to see more activity in the domestic markets this week, as investors look ahead to a Bank of Canada meeting on Wednesday. No rate changes are expecteded, however, as the BoC waits for details on the government’s stimulus measures. Also, we’ll see some employment data on Friday. Read: Don’t depend on a boost from the BoC
• Over the next few weeks, other central banks are also meeting; the market expects the ECB and Bank of Japan to ease further, weakening their respective currencies and strengthening the US$ on a relative basis. Plus, expectations of a Fed hike later this year have been growing. Read: This year, the Fed will be more defensive
• If the U.S. dollar does strengthen, there could be a weakening of oil prices. That would dampen some of the progress the TSX has been making this year, which has led it to outperform other global indices.
• Top performers year-to-date have been led by materials names, and gold in particular. Meanwhile, some healthcare, industrials and tech constituents have seen the largest declines.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.