Canada or Cant-ada?

From the desk of Tom Bruni @BruniCharting

Canada, like a few other Major Indexes from around the globe, continues to churn around all-time highs. So which way will it resolve?

Let's go sector by sector and see what the weight of the evidence suggests, just like JC did for US Stocks.

First, let's start with the TSX Composite, which continues to hover near its 2018 highs as momentum diverges. After a ~20% rally off the December lows and the presence of a flat 200-day, it would be healthy to see some consolidation at current levels before breaking out

Click on chart to enlarge view.

If we do break out without that pause first, I feel it'll have a lower probability of succeeding. Although our risk will be extremely well-defined if above 15,580, it's clear that if we fall back below those 2018 highs then near-term risk becomes elevated.

Here's the TSX Capped 60 already above their 2018 highs, but with a similar flat 200-day and bearish momentum divergence. Some consolidation above those 2018 highs would be extremely constructive.

The Equally-Weighted TSX 60 looks similar, but has failed to make new marginal highs like the Composite and Capped 60 Indexes.

The structural picture remains strong, particularly given the strength in Equities as an asset class. At the index level however, it's difficult to get overly aggressive at current levels from a tactical perspective.

So let's take a look at the sector trends.