Post #2 of 2 focuses on the absolute trends and stocks we want to be buying and selling.
First, let's start with the TSX Capped Financials which represent 33% of the TSX Composite. This chart has spent the last four years putting in a major top and the underperformance looks likely to continue. From that perspective, can the TSX Composite continue to work sustainably higher if its best players are underperforming so drastically? I'd argue no.
Click on chart to enlarge view.
Meanwhile, Technology goes parabolic relative to the TSX Composite...but it only comprises 7% of the market's weighting. Not going to be enough to offset the 33% represented by Financials and 13% represented by Energy, both of which continue to fall on an absolute and relative basis.
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