The TSX is taking it on the chin, and there’s little in the way of relief in sight. That and more from Prab Sagoo, associate director at Nasdaq Advisory Services in his weekly commentary.
- The TSX is encountering very strong headwinds presently and has fallen into correction territory YTD and is down by over 16% from its 52 week high at Monday’s close. Sustained weakness amongst resource names, which account for a little under 30% of the TSX weighting, could see the index feasibly touch bear market status.
- Three of the four heaviest weighted sectors were showing losses of between 15% to 30% YTD, while financials are also in the red.
- Furthermore, small caps are feeling more of the pressure, with the TSX Small Cap Index down 17% YTD compared to a loss of just over 10% for the TSX 60.
- Canadian dollar weakness versus the U.S. dollar continues to grow in tandem with underlying commodity weakness.
- Interestingly, average short interest bets against TSX constituents dropped notably in the second half of November as the index rallied in what was a broad round of short covering. However, we expect short levels have resumed their upward trajectory and ticked higher once again given recent market moves.