A Glimmer of Hope?
Tuesday, July 29th, 2008Although the S&P/TSX Composite Index continued its decline last week (-1.0% and a hefty -4.8% for the Venture Exchange), there was a small rebound to the upside for our broadly based unweighted index shown in the chart below. 24% of the stocks in the S&P/TSX Composite Index now have positive trend values based on our 10 week exponential moving averages.
We’re still in territory that is definitely “buyer beware”, but it’s the first positive sign in months, even if it might be short-lived.
As mentioned in our longer-term analysis in the previous week’s update, it’s rare for our index to be down in 20% territory even though you can see that it has hit those lows three times in the past 52 weeks.
The Dow Industrials also dropped -1% last week, but broader measures south of the border also suggest at least a temporary rebound. The S&P 500 declined just -0.2% and the Nasdaq rose +1.2%.
And, although we don’t publish US data at this time, we do maintain a database of roughly 4000 US stocks with their trend and consistency values, just as we do with Canadian stocks. If we were to show you a comparable chart to the one above based on those 4000 stocks, you’d see that American stocks bottomed at 22% two weeks ago, and the figure has moved up to 33% the following week, and 41% as of Friday.
One might hope that the US markets will lead in any sustainable recovery, just as they dragged the world’s markets down with their economic collapse, but only time will tell. The S&P/TSX Composite Index is also being held back by recent drops in commodity prices. ENERGY and MATERIALS account for about 50% of the S&P/TSX Composite Index these days.
As usual you’ll find the currently leading sectors and the best performers within each of those in our DATA & CHARTS workbook. It seems odd not to see ENERGY and MATERIALS in the top 5 anymore.