The Bottom Line
Technical, fundamental and seasonal influences point to another volatile period for equity markets around the world this week. Preferred strategy is to wait for weakness to purchase sectors that benefit from favourable seasonal influences at this time of year (e.g. agriculture, “gassy” equities) and to watch for entry points on weakness in other economically sensitive sector in October.
The TSX Composite Index fell 113.78 points (1.73%) last week. Intermediate trend is down. Support is at August 8th low at 11,617.81 and resistance is at 12,798.53 and near its 50 day moving average at 12,701.58. Short term momentum indicators have rolled over. Stochastics already are oversold. Strength relative to the S&P500 Index has turned negative.
The U.S. Dollar eased 0.59 last week and fell back into its previous trading range between 72.20 and 76.72 where support is likely. Short term momentum indicators are rolling over from overbought levels. Weakness late last week had more to do with anticipation of a resolution in Europe. Weaker than anticipated economic news also contributed.
Crude Oil added $0.89 per barrel last week. It has recovered to the bottom of a previous trading range and near its 50 day moving average currently at $90.37 where resistance is expected. Short term momentum indicators are trending higher, but have yet to show significant signs of peaking.
Gold fell $45.00 (2.42%) last week. Short term momentum indicators continue to rollover from overbought levels. . Resistance has formed at $1,923.70. Support is at $1,700 and possibly at its 50 day moving average currently at $1,727.24. Strength of gold equity indices relative to gold remains positive.
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