Post #2 of 2 focuses on the absolute trends and stocks we want to be buying and selling.
In our first post, we talked about relative performance in Financials rolling over aggressively. On an absolute basis, the TSX Capped Financials Index is stuck below its December 2018 lows and 2015 highs, much like US Small-Caps, the German DAX, Euro Stoxx 50, and many of the other weakest markets out there. As long as prices are below 263, the bias is to the downside with a target near 210.
Click on chart to enlarge view.
Here's the TSX Capped Materials Index, which is trying to break out above 275 on an absolute basis. Relative performance is also hitting its highest levels since 2013, suggesting that this breakout will ultimately be successful, even if prices are extended in the near-term.
As long as Financials are stuck below overhead supply and Gold Miners are breaking out, the market is suggesting its participants still have a defensive posture towards risk assets.
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