Canadian Technical Comment

Transcription

1 October TSX: Shift to defense underway as near-term pullback looms Summary Recommendation: For long-term investment managers with cash on hand, we would wait for a short-term (2-4 week) corrective phase to run its course. For short-term oriented accounts, we would look to reduce cyclical exposure, specifically to Lumber and Cannabis. For those managers required to be fully invested, we would add near-term exposure to bond proxies such as Telcos and Staples. Javed Mirza, CFA, CMT, MBA Analyst Canaccord Genuity Corp. (Canada) jmirza@canaccordgenuity.com TSX Composite/S&P 500: Short-term view: Momentum is AT levels for both the TSX Composite (see Figure 5) and the S&P 500 (see Figure 3) which, by history, typically suggests a near-term pause/pullback is likely. We are seeing similar overbought levels for the Russell 2000 (see Figure 9). For short-term/tactical oriented accounts, we would look to take profits at current levels. Intermediate-term view: The S&P 500 (see Figure 2), TSX Composite (see Figure 4), Nasdaq 100 (see Figure 6), and Russell 2000 (see Figure 8) all recently triggered new weekly mechanical buy signals, which is supportive of further upside in an intermediate-term (3 6 month) rally. For long-term oriented accounts, we view pending near-term weakness as an opportunity to add exposure. Long-term view: We view weakness as an opportunity to add exposure to the ongoing secular bull market (see It s a bull market, October 1). Thematic Ideas: Intermediate-Term Idea Long U.S. Dollar Commercial Hedger positioning is AT levels for the U.S. Dollar (see Figure 35) that are typically supportive of intermediate-term rallies. We would add exposure to the U.S. Dollar on near-term weakness (see Figure 36). We highlight stocks that benefit from an appreciation in the U.S. Dollar (see GIB.A, and OTEX, Figures 62 65). Intermediate-Term Idea Long Rails Our Canadian strategist Martin Roberge has highlighted that he likes the rails fundamentally: Robust maritime port activity worldwide suggests that carload and intermodal traffic are likely to be stronger than projected by Street analysts. An upward re-rating in rails EPS estimates should moderate overvaluation concerns and allow rail stocks to resume their outperformance (see Portfolio Strategy Incubator, October 12). From a technical perspective, we like the longer-term charts and view pending near-term weakness as an opportunity to add exposure (see CNR and CP, Figures 62 65). All values in Canadian dollars unless otherwise noted. Priced as of prior trading day's market close, ET (unless otherwise stated). Short-Term Idea Long Silver/Gold Last week, we highlighted a pending near-term rally on Gold and Silver. Gold and Silver broke above resistance at $1,298, and $17.17, respectively, confirming a short-term rally. Next upside technical targets are $1,324 on Gold (see Figure 24) and $17.87 on Silver (see Figure 26). In our view, this is a counter-trend rally, and we would look for an increase in Commercial Hedger positioning to confirm an intermediate-term rally was underway. We feature the positive charts of FVI and PAAS in Silver miners, and AEM and K in the Gold space. For important information, please see the Important Disclosures beginning on page 51 of this document. 0

2 Short-Term Idea Long Staples/Telcos The relative performance of the defensive sectors is improving. We feature the positive charts of T and RCI.B in Telcos and EMP.A and SAP in Staples. In our view, this is a counter-trend rally predicated by Portfolio Managers seeking defensive exposure. Short-Term Idea Reduce Lumber and Cannabis The Lumber and Marijuana stocks have been strong absolute and relative outperformers over the last two months. The price patterns and volume on both the weekly and daily charts suggest that these stocks are at risk of a sharp near-term corrective phase. For Lumber, Commercial Hedger positions are AT levels historically coincident with intermediate-term price peaks (see Figure 27). In the Cannabis space, our fundamental research team highlighted the strong runup in their rating changes last week for Cannabis stocks (see Provincial frameworks de-risk rec valuations, October 11). TSX Composite Sector Analysis: Recommendation: We utilize both relative performance (see Figures 43 53) and absolute performance (see Figure 1) in our analysis. The strongest sectors in the TSX Composite remain: Consumer Discretionary, Financial Services, and Energy. We are seeing early signs of relative outperformance in the more defensive sectors, such as REITS, Staples, Telcos and Utilities. This supports our view that money managers are beginning to take some risk off the table, and are looking to play defense. Featured Stock Ideas: Companies that benefit from a rising USD (intermediate-term): (+) Information Technology: GIB.A, OTEX (pages 36-37) Bond Proxies showing improving relative performance (short-term): (+) Telcos: T, RCI.B (pages 32-33) (+) Staples: EMP.A, SAP (pages 38-39) Extended leadership (short-term): (-) Marijuana: APH, WEED (pages 34-35) (-) Lumber: CFP, WFT (pages 40-41) Precious metals poised for rally (short-term): (+/=) Silver: FVI, PAAS (pages 42-43) (+) Gold: AEM, K (pages 44-45) Industrials to add on weakness (intermediate-term): (+) Rails: CP, CNR (pages 46-47) 15 October

3 Table of Contents Momentum... 4 Equities North America: S&P Equities North America: TSX Composite... 6 Equities North America: Nasdaq Equities North America: Russell Dow Theory... 9 Sentiment...10 Commodities Energy: WTI Crude...11 Commodities Energy: Brent Crude...12 Commodities Energy: Natural Gas...13 Commodities Energy: TSX Capped Energy Index...14 Commodities Base Metals: Copper...15 Commodities Precious Metals: Gold...16 Commodities Precious Metals: Silver...17 Commodities Lumber...18 Commodities Wheat...19 Fixed Income 2 Year Bill and 10 vs 2 spread...20 Fixed Income U.S. 10 Year Treasury Bill...21 Currencies U.S. Dollar Index...22 Currencies Canadian Dollar (CAD/USD)...23 Currencies Euro (Euro/USD)...24 Currencies Japanese Yen (JPY/USD)...25 Sectors Interest Rate Sensitive: Telecommunications & Utilities...26 Sectors Interest Rate Sensitive: REITS & Financial Services Sectors Healthcare & Information Technology Sectors Consumers: Staples & Discretionary Sectors Hard Assets: Materials & Energy Sectors Industrials Telecommunication Services Telus Corp. (TSX: T) Telecommunication Services Rogers Communications Inc. (TSX: RCI.B) Health Care Aphria Inc. (TSX: APH) Health Care Canopy Growth Corp. (TSX: WEED) Information Technology CGI Group Inc. (TSX: GIB.A) Information Technology Open Text Corp. (TSX: OTEX) Consumer Staples Empire Co. Ltd. (TSX: EMP.A) Consumer Staples Saputo Group Inc. (TSX: SAP) Materials (Lumber) Canfor Corp. (TSX: CFP) Materials (Lumber) West Fraser Timber Co. Ltd. (TSX: WFT) Materials (Silver) Fortuna Silver Mines (TSX: FVI) Materials (Silver) Pan American Silver Corp. (TSX: PAAS) Materials (Gold) Kinross Gold Corp. (TSX: K) Materials (Gold) Agnico-Eagle Mines Ltd. (TSX: AEM) Industrials (Railways) Canadian National Railway Co. (TSX: CNR) Industrials (Railways) Canadian Pacific Railway (TSX: CP) Appendix Glossary October

4 Momentum Figure 1: Market Momentum (see Appendix 1) Updated On: October 15, 2017 Each columns' colour scale is independent of other columns TSX Sector Sector Weight Capped Index Absolute Momentum (Weekly) Capped Index Trend Relative to the TSX (Weekly) % of Stocks With Positive Momentum (Daily) % of Stocks Improving (Daily) % of Stocks Accelerating (Daily) % of Stocks Pulling Back (Daily) % of Stocks Deteriorating (Daily) Consumer Discretionary 5.46% Accelerating Bull 72.7% 13.6% 31.8% 40.9% 13.6% Consumer Staples 3.60% Improving Bear 81.8% 9.1% 27.3% 54.5% 9.1% Energy 20.23% Accelerating Bull 52.9% 5.9% 3.9% 49.0% 41.2% Financials 34.43% Accelerating Bull 96.3% 3.7% 14.8% 81.5% 0.0% Health Care 0.62% Improving Bull 100.0% 0.0% 50.0% 50.0% 0.0% Industrials 9.42% Accelerating Bear 72.0% 20.0% 28.0% 44.0% 8.0% Information Technology 3.30% Improving Bear 80.0% 5.0% 65.0% 15.0% 15.0% Materials 11.53% Accelerating Bear 82.1% 16.1% 53.6% 28.6% 1.8% Real Estate 2.86% Improving Bear 85.7% 9.5% 71.4% 14.3% 4.8% Telecommunication Services 4.75% Accelerating Bear 100.0% 0.0% 66.7% 33.3% 0.0% Utilities 3.80% Improving Bear 87.5% 12.5% 81.3% 6.3% 0.0% TSX Sector TSX Composite, Absolute TSX Composite, Weighted Average Source: Canaccord Genuity Research Index Momentum (Weekly) Index Trend (Weekly) % of Stocks With Positive Momentum (Daily) % of Stocks Improving (Daily) % of Stocks Accelerating (Daily) % of Stocks Pulling Back (Daily) % of Stocks Deteriorating (Daily) Accelerating Bull 77.13% 10.47% 38.37% 38.76% 12.40% Accelerating Bull 80.82% 8.19% 28.18% 52.64% 10.99% See Appendix 1 on page 48 for momentum diagram. 15 October

5 Equities North America: S&P 500 Figure 2: S&P 500 Weekly (3 Years) Figure 3: S&P 500 Daily (9 Months) Top Panel: MACD The S&P 500 recently registered a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: VIX VIX is trending lower. Third Panel: Price The index just scored new all-time highs, a strong technical positive. Last week s price pattern suggests a pending near-term pause/pullback. Bottom Panel: Volume and On-Balance-Volume Volume over the last two weeks has begun to wane, which suggests the move higher is at risk of a near-term pause/pullback. Top Panel: MACD Momentum appears to be stalling (see red circle). A crossover would trigger a new short-term mechanical sell signal, a technical negative. Second Panel: McClellan Summation Index This indicator is at overbought extremes, which suggests a pending near term pause/pull-back (see red circle). Third Panel: Price The S&P 500 remains above the 50-day and 200-day moving averages, both technical positives. Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume remains in an uptrend, another technical positive (see blue arrow). However, early signs of selling are appearing (see red circle). See glossary on page 49 for VIX and McClellan Summation explanation. 15 October

6 Equities North America: TSX Composite Figure 4: TSX Composite Weekly (3 Years) Figure 5: TSX Composite Daily (9 Months) Top Panel: MACD The TSX recently scored a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: Bullish Percent Bullish percent is trending higher, but not yet at oversold levels that would typically suggest caution. Third Panel: Price Price is above the 40-week average and the index is in a new intermediate-term uptrend, both technical positives. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume have begun to wane, which suggests a pending near-term pause/pullback (see blue circle). Top Panel: MACD Momentum is stalling and the index appears poised to trigger a new daily sell signal which suggests short-term pending weakness (see red circle). Second Panel: McClellan Summation Index This indicator is at levels that typically suggest a pending near-term pause/pullback (see red circle). Third Panel: Price The TSX remains above the 50- and 200-day moving average, a strong technical positive. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are trending higher, a technical positive (see blue circle). See glossary on page 49 for Bullish Percent and McClellan Summation explanation. 15 October

7 Equities North America: Nasdaq 100 Figure 6: Nasdaq 100 Weekly (3 Years) Figure 7: Nasdaq 100 Daily (9 Months) Top Panel: MACD The index recently triggered a new weekly mechanical sell signal, a technical negative (see red circle), however, momentum is turning back up (see blue circle). Second Panel: Nasdaq 100 versus S&P 500 The Nasdaq 100 is trending higher versus the S&P 500 (see blue arrow). Third Panel: Price The Nasdaq 100 scored new all-time price highs last week, a strong technical positive. Next upside technical target is near 6,250. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are trending higher, both technical positive. Top Panel: MACD The Nasdaq 100 recently triggered a new daily mechanical buy signal, a technical positive (see blue circle). Second Panel: Nasdaq 100 versus S&P 500 The Nasdaq 100 is reaccelerating versus the S&P 500, a technical positive (see blue circle). Third Panel: Price The index recently broke above major resistance near 6,000, another technical positive. Next upside technical target is near 6,250. Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume remains in an uptrend, however, downside volume is increasing which suggests pending near-term weakness (see red circle). 15 October

8 Equities North America: Russell 2000 Figure 8: Russell 2000 Weekly (3 Years) Figure 9: Russell 2000 Daily (9 Months) Top Panel: MACD The Russell 2000 recently scored a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: Russell 2000 versus S&P 500 The Russell 2000 is breaking a 10-month downtrend in relative performance versus the S&P 500, another technical positive (see blue circle). Third Panel: Price The index remains in an intermediate-term uptrend. Next upside technical target is near 152. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are confirming the breakout, a strong technical positive (see blue circle). Top Panel: MACD The index triggered a short-term mechanical sell signal, an early technical negative (see red circle). Second Panel: Russell 2000 versus S&P 500 Relative performance of the Russell 2000 versus the S&P 500 is deteriorating (see red circle). Third Panel: Price The index remains in an uptrend; however, it is short-term overbought. First support is near , then Important support is near Volume and On-Balance-Volume Volume and On-Balance-Volume confirm the move higher, a strong technical positive (see blue circle). 15 October

9 Dow Theory Figure 10: Dow Jones Industrial Average Weekly (3 Years) Figure 11: Dow Jones Transportation Average Weekly (3 Years) Top Panel: MACD The Dow Jones Industrials recently triggered a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: DJ Industrials versus MSCI Emerging Markets The index is attempting to break a downtrend in place since December 2016, versus the MSCI Emerging Markets Fund (see blue circle). Third Panel: Price The index broke out to new all-time highs last week, a strong technical positive. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume confirm the move higher in price, another technical positive (see blue circle). Top Panel: MACD The Dow Jones Transports just triggered a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: DJ Transports versus DJ Utilities Dow Jones Transports are showing early signs of outperforming the Dow Jones Utilities for the first time since December, a technical positive (see blue circle). Third Panel: Price The index recently broke out to new all-time highs, a strong technical positive. The price patterns over the last two weeks suggest a pending near-term pause/pullback (see red circle). Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume confirm the move higher, another technical positive (see blue circle). See glossary on page 49 for Dow Jones Industrial Average and Dow Jones Transportation Average explanation. 15 October

10 Sentiment Figure 12: S&P500 S&P 500 Advance/Decline, All American Investors Intelligence Bull-Bear, Bullish Percent Weekly (3 Years) Top Panel: MACD MACD recently triggered a new weekly mechanical buy signal (see blue circle), a technical positive. Second Panel: Advance/Decline Line The S&P Advance/Decline line remains in an uptrend since 2016 confirming market breadth, a strong technical positive (see blue arrow). Third Panel: All American Investors Intelligence Bull-Bear AAII Bull AAII Bear has recently turned up from levels that typically support further upside (see blue circle). Fourth Panel: Bullish Percent The percentage of stocks with bullish point-and-figure patterns turned up in August from levels that historically support a multi-month advance (see blue circle). Fifth Panel: Price The S&P 500 continues to make new all-time price highs, a strong technical positive. Volume and On-Balance-Volume Volume and On-Balance-Volume confirm the price uptrend (see blue arrow), another technical positive. See glossary on page 49 for Advance/Decline, Bullish Percent and All-American Investors Intelligence Bull-Bear explanation. 15 October

11 Commodities Energy: WTI Crude Figure 13: WTI Crude Commercial Hedger Weekly (3 Years) Figure 14: WTI Crude Daily (9 Months) Top Panel: Price WTI Crude remains in a sideways trading range bounded by 55 to the upside and 40 to the downside. An intermediate-term corrective phase appears to be taking hold. Bottom Panel: Commitment of Trader Positions Commercial Hedger positioning is at levels that suggests an intermediate-term corrective phase is pending (see blue boxes). Top Panel: MACD WTI Crude recently triggered a new short-term mechanical sell signal (see red circle), a technical negative. Second Panel: WTI Crude vs. Gold This ratio is peaking (see red circle), which we believe suggests a re-balancing out of WTI Crude and into Gold. Third Panel: Price Chart WTI Crude is testing resistance near Major resistance is near First support is near Major support is near Bottom Panel: Volume and On-Balance-Volume Selling volume is increasing, a technical negative (see red circle), that suggests further near-term weakness. See glossary on page 49 for Commitment of Traders explanation. 15 October

12 Commodities Energy: Brent Crude Figure 15: Brent Crude Commercial Hedger Weekly (3 Years) Figure 16: Brent Crude Daily (9 Months) Top Panel: Price Brent Crude remains in a sideways trading range bounded by 58 to the upside and 42 to the downside. An intermediate-term corrective phase appears to be taking hold. Top Panel: MACD Brent recently triggered a new daily mechanical sell signal (see red circle), a technical negative. Second Panel: Brent vs. WTI The outperformance of Brent relative to WTI Crude appears to be reaccelerating (see blue arrow). Third Panel: Price Chart Brent is testing resistance near Major resistance is near First support is near 56.28, then Major support is near Bottom Panel: Volume and On-Balance-Volume Strong selling volume suggests further near-term weakness is likely (see red circle). See glossary on page 49 for Commitment of Traders explanation. 15 October

13 Commodities Energy: Natural Gas Figure 17: Natural Gas Commercial Hedger Weekly (3 Years) Figure 18: Natural Gas Daily (9 Months) Top Panel: Price The long-term downtrend remains in place, a new intermediateterm downtrend is underway. Bottom Panel: Commitment of Trader Positions Commercial Hedgers are beginning to get long, suggesting that an intermediate-term low is near (see blue box). Top Panel: MACD Natural Gas recently triggered a short-term mechanical buy signal (see blue circle), a technical positive. Second Panel: Natural Gas vs. WTI Crude This ratio remains in a downtrend. We are looking for an upside trend break to support an intermediate-term low. Third Panel: Price Chart Natural Gas just bounced from support near Important support is near First resistance is near 3.11, then Bottom Panel: Volume and On-Balance-Volume Volume is showing signs of buying, an early technical positive (see blue circle). See glossary on page 49 for Commitment of Traders explanation. 15 October

14 Commodities Energy: TSX Capped Energy Index Figure 19: TSX Capped Energy Weekly (3 Years) Figure 20: TSX Capped Energy Daily (9 Months) Top Panel: MACD The index recently triggered a new weekly mechanical buy signal, a technical positive. Second Panel: XEG vs. TSX This ratio is stalling after breaking a 10-month relative performance downtrend, an early technical negative (see red circle). Third Panel: Price Chart and Volume by Price Testing important resistance at 12.14, next resistance is near Important support at 11.30, then Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are improving, both early technical positives (see blue circle). Top Panel: MACD The index recently triggered a new daily mechanical sell signal (see red circle), a technical negative. Second Panel: XEG vs TSX New short-term relative strength uptrend relative to the TSX is showing signs of deteriorating (see red circle). Third Panel: Price Chart Stalling after testing resistance near First resistance is near the 20-day moving Important support is near 11.30, then Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume show signs of accumulation, an early technical positive (see blue circle). 15 October

15 Commodities Base Metals: Copper Figure 21: Copper Commercial Hedger Weekly (3 Years) Figure 22: Copper Daily (9 Months) Top Panel: Price Reaccelerating within intermediate-term uptrend. Major resistance is near 3.20, then Important support is near 2.80, then Bottom Panel: Commitment of Trader Positions Commercial Hedger positions are near relative extremes which suggests a pending near-term pause/pullback. Add exposure on weakness. Top Panel: MACD Copper recently triggered a new short-term mechanical buy (see blue circle), a technical positive. Second Panel: Copper vs. Gold Uptrend remains intact, Copper is outperforming Gold and remains one of our favored commodity plays. Third Panel: Price Chart Copper is reaccelerating with first resistance near 3.16, then First support is near 3.08, then Major support is near Bottom Panel: Volume and On-Balance-Volume Volume shows signs of accumulation (see blue circle) and On-Balance-Volume continues to trend higher (see blue arrow), both technical positives. See glossary on page 49 for Commitment of Traders explanation. 15 October

16 Commodities Precious Metals: Gold Figure 23: Gold Commercial Hedger Weekly (3 Years) Figure 24: Gold Daily (9 Months) Top Panel: Price Intermediate-term pullback is underway, supported by increasing downside volume. The latest weekly price pattern suggests that a nearterm rally is developing. Bottom Panel: Commitment of Trader Positions Commercial Hedger positions are coming off relative extremes which suggests further intermediate-term weakness is likely. Top Panel: MACD Gold just triggered a new mechanical buy signal (see blue circle), a technical positive. Second Panel: Gold vs. WTI Crude Turning up in favor of Gold (see blue circle). Third Panel: Price Chart First support at 1,262, then 1,227. Major support at 1,194. Recent daily price patterns support a test of resistance near 1,324. Major resistance is near 1,350. Bottom Panel: Volume and On-Balance-Volume Volume remains supportive of a near-term rally (see blue circle). See glossary on page 49 for Commitment of Traders explanation. 15 October

17 Commodities Precious Metals: Silver Figure 25: Silver Commercial Hedger Weekly (3 Years) Figure 26: Silver Daily (9 Months) Top Panel: Price An intermediate-term pullback is underway, within a longerterm downtrend. Bottom Panel: Commitment of Trader Positions Coming off relative extremes, which suggests that further intermediate-term weakness is likely. Top Panel: MACD Silver just triggered a new short-term mechanical buy signal, a technical positive (see blue circle). Second Panel: Silver vs. Gold Silver is outperforming Gold (see blue circle). We continue to prefer Silver over Gold in the Precious Metals space. Third Panel: Price Chart The recent price action on Silver supports further nearterm upside. First resistance is near Major resistance is near Bottom Panel: Volume and On-Balance-Volume The recent increase in volume supports the current short-term rally (see blue circle). See glossary on page 49 for Commitment of Traders explanation. 15 October

18 Commodities Lumber Figure 27: Lumber Commercial Hedger Weekly (3 Years) Figure 28: Lumber Daily (9 Months) Top Panel: Price Lumber broke above major resistance near 415, a strong technical positive. Next upside technical target is near 490. Bottom Panel: Commitment of Trader Positions Commercial Hedger positions are approaching relative extremes which suggest that the reward/risk ratio is no longer favorable and a near-term pause/pull-back is likely. Top Panel: MACD Lumber remains on a daily mechanical buy signal (see blue circle). Second Panel: Lumber vs. CRB Index Lumber continues to outperform the CRB index (see blue arrow), a technical positive. Third Panel: Price Chart Lumber is probing resistance near 425. Next upside technical target is near 490. First support is near 415, then 394. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume support the current uptrend (see blue arrow). See glossary on page 49 for Commitment of Traders and CRB Index explanation. 15 October

19 Commodities Wheat Figure 29: Wheat Commercial Hedger Weekly (3 Years) Figure 30: Wheat Daily (9 Months) Top Panel: Price Wheat is attempting an intermediate-term rally within a longterm downtrend. Bottom Panel: Commitment of Trader Positions No relevant extreme positioning here. Top Panel: MACD Wheat recently triggered a short-term mechanical sell signal (see red circle), a technical negative. Second Panel: Wheat vs. CRB Index The relative performance of Wheat is showing signs of improving versus the CRB (see blue circle), an early technical positive. Third Panel: Price Chart Wheat is forging a series of higher highs and lows since late August, an early technical positive. Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume is trending lower, an early technical negative. See glossary on page 49 for Commitment of Traders explanation. 15 October

20 Fixed Income 2 Year Bill and 10 vs 2 spread Figure 31: U.S. 2-Year Treasury Bill Weekly (3 Years) Figure 32: U.S. 2-Year vs. 10-Year Treasury Bill Spread Daily (9 Months) Top Panel: Price The 2-Year Treasury Bill continues to forge a series of lower highs and lows, a technical negative. Bottom Panel: Commitment of Trader Positions Commercial Hedger positions are approaching levels consistent with prior rallies in 2-Year Treasury Bill prices. This implies a corresponding decrease in the 2-year yield. Top Panel: MACD The spread just triggered a new daily mechanical sell signal (see red circle), a technical negative. Second Panel: RSI RSI is below 50, a technical negative that warns of a potential trend change (see red circle). Bottom Panel: Price Chart The spread was attempting to break a downtrend in place since July. A close below 0.77 would be a lower low, a strong technical negative. See glossary on page 49 for Commitment of Traders explanation. 15 October

21 Fixed Income U.S. 10 Year Treasury Bill Figure 33: U.S. 10-Year Treasury Bill Commercial Hedger Weekly (3 Years) Figure 34: U.S. 10-Year Treasury Yield Daily (9 Months) Top Panel: Price An intermediate-term rally is underway within a long-term uptrend. Bottom Panel: Commitment of Trader Positions Not yet at relative extremes. Top Panel: MACD The 10-Year Treasury Yield just scored a new short-term mechanical sell signal (see red circle), a technical negative. Second Panel: RSI This indicator is testing the 50 level, an early technical negative (see red circle). Bottom Panel: Price Chart A series of higher highs and higher lows are in place since September, confirming a new short-term uptrend. A close above 2.19 would be a technical negative, and confirm a new short-term downtrend. See glossary on page 49 for Commitment of Traders explanation. 15 October

22 Currencies U.S. Dollar Index Figure 35: U.S. Dollar Commercial Hedger Weekly (3 Years) Figure 36: U.S. Dollar (DXY) Daily (9 Months) Top Panel: Price An intermediate-term pullback is underway within a longer-term uptrend. Bottom Panel: Commitment of Trader Positions Narrowing of positions has typically preceded an intermediate-term rally in the USD (see blue boxes). We are seeing that narrowing occur now, which suggests a new intermediate-term upleg is developing. Top Panel: MACD The U.S. Dollar Index remains on a daily mechanical buy signal (see blue circle), a technical positive. Second Panel: RSI RSI is trending above 50, another technical positive (see blue circle). Bottom Panel: Price Chart The U.S. Dollar Index has broken above the 50-day average for the first time since April 2017, an early technical positive. First resistance is near Next resistance is near 96.59, then A close above the 200-day average, currently at 97.51, would be a strong technical positive. See glossary on page 49 for DXY and Commitment of Traders explanation. 15 October

23 Currencies Canadian Dollar (CAD/USD) Figure 37: Canadian Dollar Commercial Hedger Weekly (3 Years) Figure 38: Canadian Dollar Daily (9 Months) Top Panel: Price An intermediate-term rally is underway within a long-term downtrend. Bottom Panel: Commitment of Trader Positions Commercial Hedger positions are at relative extremes which suggests the Canadian Dollar is peaking. Top Panel: MACD CAD/USD remains on a daily mechanical sell signal (see red circle), a technical negative. However, momentum is showing signs of improving, an early technical positive (see blue circle). Second Panel: RSI - RSI has broken below 50, an early technical negative. Bottom Panel: Price Chart CAD/USD is testing resistance near with next resistance near First support is near Major support is near See glossary on page 49 for Commitment of Traders explanation. 15 October

24 Currencies Euro (Euro/USD) Figure 39: Euro Commercial Hedger Weekly (3 Years) Figure 40: Euro vs. U.S. Dollar Daily (9 Months) Top Panel: Price An intermediate-term rally is underway within a longer-term downtrend. Bottom Panel: Commitment of Trader Positions Commercial Hedger positions are approaching relative extremes which suggests an intermediate-term pause/pullback is underway (see blue boxes). Top Panel: MACD EUR/USD just triggered a new short-term mechanical buy signal (see blue circle), a technical positive. Second Panel: RSI RSI is attempting to poke above 50, an early technical positive (see blue circle). Bottom Panel: Price Chart EUR/USD is attempting to hold above support at Important support is near First resistance is near Major resistance is near See glossary on page 49 for Commitment of Traders explanation. 15 October

25 Currencies Japanese Yen (JPY/USD) Figure 41: Japanese Yen Commercial Hedger Weekly (3 Years) Figure 42: Japanese Yen vs. U.S. Dollar Daily (9 Months) Top Panel: Price An intermediate-term rally is underway within a long-term downtrend. Bottom Panel: Commitment of Trader Positions JPY/USD is approaching relative extremes that would warrant taking a long position. Top Panel: MACD JPY/USD just triggered a new daily mechanical buy signal (see blue circle), an early technical positive. Second Panel: RSI - This indicator is attempting to break above 50, an early technical positive (see blue circle). Bottom Panel: Price Chart First support is near A close below this level sees next important support at First resistance is near , then See glossary on page 49 for Commitment of Traders explanation. 15 October

26 Sectors Interest Rate Sensitive: Telecommunications & Utilities Figure 43: Telecommunications Weekly (3 Years) Figure 44: Utilities Weekly (3 Years) Top Panel: MACD Recently triggered a new weekly mechanical sell signal (see red circle), a technical negative. Bottom Panel: Price Chart The sector is underperforming relative to the TSX Composite (see red arrow). However, recent weekly price patterns suggest a nearterm rally is developing (see blue circle). Top Panel: MACD Recently triggered a new weekly mechanical sell signal (see red circle). Bottom Panel: Price Chart The sector is underperforming relative to the TSX Composite (see red arrow); however, the recent weekly price patterns suggest that a near-term rally is underway (see blue circle). 15 October

27 Sectors Interest Rate Sensitive: REITS & Financial Services Figure 45: Real Estate Investment Trusts Weekly (3 Years) Figure 46: Financial Services Weekly (3 Years) Top Panel: MACD Recently triggered a weekly mechanical sell signal (see red circle), a technical negative. However, weekly momentum is improving (see blue circle). Bottom Panel: Price Chart The sector is underperforming relative to the TSX Composite. A near-term rally is underway, a close above the 40-week average at would be a strong technical positive. Top Panel: MACD Remains on a weekly mechanical buy signal (see blue circle). Bottom Panel: Price Chart Reaccelerating within an intermediate-term uptrend (see blue arrow). Financial Services is one the strongest sectors within the TSX Composite. 15 October

28 Sectors Healthcare & Information Technology Figure 47: Healthcare Weekly (3 Years) Figure 48: Information Technology Weekly (3 Years) Top Panel: MACD Recently triggered a weekly mechanical buy signal (see blue circle), a technical positive. Bottom Panel: Price Chart Sideways trading range (see blue box), within a longterm downtrend. Watch for a breakout of this range to determine the next intermediate-term trend. Top Panel: MACD Remains on a weekly mechanical sell signal (see red circle). Bottom Panel: Price Chart The sector is underperforming relative to the TSX Composite (see red arrow). However, recent weekly price patterns show signs of improvement (see blue circle). 15 October

29 Sectors Consumers: Staples & Discretionary Figure 49: Consumer Staples Weekly (3 Years) Figure 50: Consumer Discretionary Weekly (3 Years) Top Panel: MACD Remains on a weekly mechanical sell signal (see red circle), a technical negative. Bottom Panel: Price Chart A new long-term relative performance downtrend versus the TSX Composite is in place after peaking in early 2016 (see red arrow). Recent price patterns support a near-term counter-trend rally (see blue circle). Top Panel: MACD Just triggered a new weekly mechanical buy signal (see blue circle), a technical positive. Bottom Panel: Price Chart Reaccelerating within an intermediate-term uptrend (see blue arrow), a strong technical positive. Consumer Discretionary is one of the strongest sectors within the TSX Composite. Last week s price pattern suggests a pending near-term pause/pullback (see red circle). 15 October

30 Sectors Hard Assets: Materials & Energy Figure 51: Materials Weekly (3 Years) Figure 52: Energy Weekly (3 Years) Top Panel: MACD Just triggered a new weekly mechanical sell signal (see red circle), a technical negative. Bottom Panel: Price Chart Remains within a sideways trading range, and is attempting to forge a low here. A close above the 40- and 200-week averages (currently at ) would be a strong technical positive. Top Panel: MACD Remains on a weekly mechanical buy signal (see blue circle), a technical positive. However, momentum is showing signs of stalling, an early technical negative (see red circle). Bottom Panel: Price Chart Intermediate-term uptrend (see blue arrow) in place within a long-term downtrend. 15 October

31 Sectors Industrials Figure 53: Industrials Weekly (3 Years) Top Panel: MACD Remains on a weekly mechanical sell signal, a technical negative. Bottom Panel: Price Chart Relative performance versus the TSX Composite is attempting to reaccelerate within both intermediate and long-term uptrends. Industrials remain one of the strongest sectors within the TSX Composite. 15 October

32 Telecommunication Services Telus Corp. (TSX: T) Figure 54: T Weekly (3 Years) Figure 55: T Daily (9 Months) Top Panel: MACD Telus appears poised to trigger a new weekly mechanical buy signal (see blue circle), an early technical positive. Second Panel: SCTR The stock is trending higher on a relative basis, a technical positive (see blue arrow). Third Panel: Price The stock is attempting to break out of a multi-month consolidation. A close above sees next upside technical Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume continue to trend higher, another technical positive (see blue arrow). Top Panel: MACD The stock recently triggered a daily mechanical buy signal, see blue circle). However, momentum is showing signs of stalling, an early technical negative (see red circle). Second Panel: SCTR Relative strength is trending higher, a technical positive (see blue arrow). Third Panel: Price The stock appears poised to test resistance near A close above this level would be a strong technical positive. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume continue to trend higher and are supportive of an attempt to push higher (see blue arrow). 15 October

33 Telecommunication Services Rogers Communications Inc. (TSX: RCI.B) Canadian Technical Comment Figure 56: RCI Weekly (3 Years) Figure 57: RCI Daily (9 Months) Top Panel: MACD Rogers appears poised to trigger a new weekly mechanical buy signal (see blue circle), an early technical positive. Second Panel: SCTR Relative strength is reaccelerating, a technical positive (see blue arrow). Third Panel: Price The stock recently broke out to new all-time highs, a strong technical positive. Next upside technical target is near Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume support the move higher (see blue arrow). Top Panel: MACD The stock recently triggered a new daily mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR Relative strength continues to trend higher, a technical positive (see blue arrow). Third Panel: Price The stock is trading above the 50- and 200-day moving averages, confirming the short and long-term trend are up, a technical positive. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume remain supportive of the current uptrend, another technical positive (see blue arrow). 15 October

34 Health Care Aphria Inc. (TSX: APH) Figure 58: APH Weekly (3 Years) Figure 59: APH Daily (9 Months) Top Panel: MACD The stock recently triggered a weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR Relative strength remains strong, and it is one of the strongest stocks on the TSX (see blue arrow). Third Panel: Price The stock appears poised to test important resistance near Recent weekly price patterns suggest a pending near-term pause/pullback. Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume is trending higher; however, volume last week was light which supports a near-term consolidation (see blue circle). Top Panel: MACD The stock remains on a mechanical buy signal, see blue circle, a technical positive. However, momentum has begun to stall recently (see red circle), an early technical negative. Second Panel: SCTR Relative strength remains strong, and it is one of the strongest stocks on the TSX (see blue arrow) Third Panel: Price The stock is testing resistance near Recent price patterns suggest a pending near-term pause/pullback. Bottom Panel: Volume and On-Balance-Volume Selling volume is increasing which supports our view that a near-term pause/pullback is likely (see red circle). 15 October

35 Health Care Canopy Growth Corp. (TSX: WEED) Figure 60: WEED Weekly (3 Years) Figure 61: WEED Daily (9 Months) Top Panel: MACD The stock recently triggered a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR The stock is one of the strongest in the TSX (see blue arrow), another technical positive. Third Panel: Price Last week s price pattern is a reversal pattern which suggests a pending near-term pause/pullback is likely. First support is near Major support is near Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are supportive of the move higher (see blue arrow) and confirm the current uptrend, another technical positive. Top Panel: MACD The stock remains on a daily mechanical buy signal (see blue circle), a technical positive. However, momentum is showing signs of stalling (see red circle). Second Panel: SCTR The stock remains one of the strongest in the TSX (see blue arrow), another technical positive. Third Panel: Price The stock is stalling after testing resistance near First support is near Important support is near 11.87, then Bottom Panel: Volume and On-Balance-Volume The last two days have seen significant selling pressure (see red circle), which supports our view that a nearterm pause/pullback is developing. 15 October

36 Information Technology CGI Group Inc. (TSX: GIB.A) Figure 62: GIB Weekly (3 Years) Figure 63: GIB Daily (9 Months) Top Panel: MACD The stock just triggered a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR CGI Group s relative strength within a group of stocks is trending higher (see blue circle), a technical positive. Third Panel: Price Important resistance is near A close above this level sees next upside target near Bottom Panel: Volume and On-Balance-Volume The stock recently saw some strong selling (see red circle), however, On-Balance-Volume is beginning to tick back up, an early technical positive. Top Panel: MACD The stock remains on a daily mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR The relative strength of the stock is trending higher versus the TSX (see blue circle), another technical positive. Third Panel: Price The stock is trading above the 50- and 200-day moving averages, both technical positives. First support is near , then the 200-day average, currently at Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume is beginning to trend higher, an early technical positive (see blue arrow). 15 October

37 Information Technology Open Text Corp. (TSX: OTEX) Figure 64: OTEX Weekly (3 Years) Figure 65: OTEX Daily (9 Months) Top Panel: MACD The stock just triggered a new weekly mechanical buy signal (see blue circle), a technical positive. Second Panel: SCTR The SCTR score (relative strength) is beginning to turn up (see blue circle), an early technical positive. Third Panel: Price The stock is attempting to break out of an intermediate-term downtrend. Major resistance is near First support is near Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are beginning to trend higher (see blue arrow), another technical positive. Top Panel: MACD The stock remains on a daily mechanical buy signal (see blue circle), a technical positive. Second Panel: SCTR Relative strength has turned up and appears poised to test a downtrend in place since May, an early technical positive (see blue circle). Third Panel: Price The stock recently broke above the 50-day average, a technical positive, and appears poised to test the 200-day moving average, currently at A close above the 200-day would be a strong technical positive. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are beginning to show signs of accumulation (see blue circle), after selling pressure from May September (see red arrow). 15 October

38 Consumer Staples Empire Co. Ltd. (TSX: EMP.A) Figure 66: EMP.A Weekly (3 Years) Figure 67: EMP.A Daily (9 Months) Top Panel: MACD Empire recently triggered a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR Relative strength remains in an uptrend, a technical positive (see blue arrow). Third Panel: Price The stock is holding above support near Recent weekly price patterns suggest a new intermediate-term upleg is developing. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume remain supportive of an intermediate-term upleg (see blue circle), another technical positive. Top Panel: MACD The stock appears poised to trigger a new daily mechanical buy signal (see blue circle), an early technical positive. Second Panel: SCTR Relative strength remains in an uptrend, a technical positive (see blue arrow). Third Panel: Price The stock remains above support near Important resistance is near A close above this level sees next upside technical target near Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume support a push higher (see blue circles and blue arrow), another technical positive. 15 October

39 Consumer Staples Saputo Group Inc. (TSX: SAP) Figure 68: SAP Weekly (3 Years) Figure 69: SAP Daily (9 Months) Top Panel: MACD Saputo remains on a weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR Relative strength is showing signs of improvement, an early technical positive (see blue circle). Third Panel: Price The stock is in an intermediate-term uptrend and appears poised to test resistance near A close above this level sees next upside technical target near Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume is trending lower, a technical negative (see red arrow). We would like to see volume pick up, to remain supportive of further upside in the current intermediate-term rally. Top Panel: MACD Saputo just triggered a new daily mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR Relative strength is showing signs of improvement, an early technical positive (see blue circle). Third Panel: Price The stock is above the 50- and 200-day moving averages, both technical positive. First resistance is near A close above this level sees next upside technical targets near 44.70, then Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are beginning to see signs of improvement, an early technical positive. (see blue arrow). 15 October

40 Materials (Lumber) Canfor Corp. (TSX: CFP) Figure 70: CFP Weekly (3 Years) Figure 71: CFP Daily (9 Months) Top Panel: MACD Canfor remains on a weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR The stock remains one of the strongest in the TSX (see blue arrow). Third Panel: Price The stock failed to break above important resistance near Last week s price pattern suggests pending near-term weakness is likely. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume remain in an uptrend. The recent decrease in volume supports our view that a near-term consolidation is likely. Top Panel: MACD The stock appears poised to trigger a new short-term mechanical sell signal, an early technical negative (see red circle). Second Panel: SCTR The stock remains one of the strongest in the TSX (see blue arrow). Third Panel: Price Canfor is stalling near important resistance at First support is near 23.83, then the Important support is near 23.10, then Bottom Panel: Volume and On-Balance-Volume Downside volume is increasing which suggests portfolio managers are taking profits, an early technical negative (see red circle). 15 October

41 Materials (Lumber) West Fraser Timber Co. Ltd. (TSX: WFT) Figure 72: WFT Weekly (3 Years) Figure 73: WFT Daily (9 Months) Top Panel: MACD West Fraser Timber recently triggered a weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR The stock remains one of the strongest in the TSX (see blue arrow). Third Panel: Price The stock failed to break above important resistance near Last week s price pattern suggests pending near-term weakness is likely. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume remain in an uptrend. The recent decrease in volume supports our view that a near-term pause/pullback is likely. Top Panel: MACD The stock appears poised to trigger a new short-term mechanical sell signal, an early technical negative (see red circle). Second Panel: SCTR The stock remains one of the strongest in the TSX (see blue arrow). Third Panel: Price West Fraser Timber is stalling near important resistance at First support is near the 72.41, then Important support is near 68.43, then the Bottom Panel: Volume and On-Balance-Volume Since late September, the stock is beginning to show some selling pressure, which suggests portfolio managers are beginning to take profits, an early technical negative (see red circles). 15 October

42 Materials (Silver) Fortuna Silver Mines (TSX: FVI) Figure 74: FVI Weekly (3 Years) Figure 75: FVI Daily (9 Months) Top Panel: MACD The stock recently triggered a new weekly mechanical buy signal (see blue circle), a technical positive. Second Panel: SCTR Relative strength is showing early signs of improvement (see blue circle). Third Panel: Price The stock is attempting to stabilize at important support near A close above resistance near 6.94 would be a strong technical positive. Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume has begun to trend higher since May, which suggests the stock is under accumulation, a technical positive (see blue arrow). Top Panel: MACD The stock recently triggered a new short-term mechanical buy signal (see blue circle), a technical positive. Second Panel: SCTR We are monitoring the relative strength of the stock for signs of improvement. Third Panel: Price A near-term rally is underway, with first resistance near A close above this level sees next resistance near Bottom Panel: Volume and On-Balance-Volume The stock is showing signs of accumulation (see blue circle), an early technical positive, after seeing short-term selling pressure from July to late September. 15 October

43 Materials (Silver) Pan American Silver Corp. (TSX: PAAS) Figure 76: PAAS Weekly (3 Years) Figure 77: PAAS Daily (9 Months) Top Panel: MACD The stock recently triggered a new weekly mechanical buy signal (see blue circle), a technical positive. Second Panel: SCTR Relative strength is beginning to deteriorate, an early technical negative (see red circle). Third Panel: Price The stock remains in a sideways trading range bounded by to the downside and to the upside. We would watch for a breakout of this trading range to determine the direction of the next intermediate-term trend. Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume has been drifting lower, which suggests potential distribution. We would continue to monitor volume to watch for an increase in buying or selling pressure. Top Panel: MACD The stock recently triggered a new short-term mechanical buy signal (see blue circle), a technical positive. Second Panel: SCTR The stock has been moving sideways in relative strength (see blue boxes), which has historically been a precursor to sharp moves higher. Third Panel: Price The stock is testing important resistance near A close above this level would be a strong technical positive with next resistance near 23.06, then Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume is trending lower, a technical negative (see red arrow). We would be looking for an increase in upside volume to support a sustainable move higher in the stock. 15 October

44 Materials (Gold) Kinross Gold Corp. (TSX: K) Figure 78: K Weekly (3 Years) Figure 79: K Daily (9 Months) Top Panel: MACD Kinross remains on a weekly mechanical buy signal, a technical positive. Second Panel: SCTR Relative strength is reaccelerating versus the TSX, another technical positive (see blue arrow). Third Panel: Price A new intermediate-term rally is underway. Important resistance is near 6.32, major resistance is near Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are showing signs of accumulation, and remain supportive of the current intermediate-term rally (see blue circle, blue arrow). Top Panel: MACD Kinross just triggered a new short-term mechanical buy signal, a technical positive. Second Panel: SCTR Relative strength is trending higher versus the TSX, another technical positive (see blue arrow). Third Panel: Price The stock is above the 50- and 200-day moving averages, both technical positives. First resistance is near 5.75, then Major resistance is near Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume continue to trend higher, which supports further upside (see blue arrow). 15 October

45 Materials (Gold) Agnico-Eagle Mines Ltd. (TSX: AEM) Figure 80: AEM Weekly (3 Years) Figure 81: AEM Daily (9 Months) Top Panel: MACD Weekly momentum is showing signs of improving, an early technical positive (see blue circle). Second Panel: SCTR Relative strength versus the TSX is showing early signs of improving (see blue circle). Third Panel: Price The stock is bouncing from important support near First resistance is near Major resistance is near Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume remains in a long-term uptrend, and is showing signs of improving after selling pressure in September (see blue arrow). Top Panel: MACD Agnico-Eagle Mines just triggered a new short-term mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR The stock has been moving sideways in relative strength (see blue circles), which has historically been a precursor to sharp moves higher. Third Panel: Price The stock appears poised to test resistance near 58.84, and the 50-day, currently at A close above the 50-day would confirm a shortterm uptrend is in place, a technical positive. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are showing signs of accumulation, which supports further upside in the current short-term rally. 15 October

46 Industrials (Railways) Canadian National Railway Co. (TSX: CNR) Figure 82: CNR Weekly (3 Years) Figure 83: CNR Daily (9 Months) Top Panel: MACD The stock remains on a weekly mechanical sell signal, a technical negative (see red circle). Downward momentum is showings signs of slowing. Second Panel: SCTR Relative strength versus the TSX is showing signs of improvement, an early technical positive (see blue circle). Third Panel: Price The stock remains in a sideways trading range since July bounded by to the upside and to the downside. Watch for a breakout of this range to determine the direction of the next intermediate-term trend. Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are showing signs of accumulation, an early technical positive (see blue circle). Top Panel: MACD The stock recently triggered a short-term mechanical sell signal, a technical negative (see red circle). Second Panel: SCTR Relative strength versus the TSX is showing signs of improvement, an early technical positive (see blue circle). Third Panel: Price The stock is above the 50- and 200-day moving averages, a technical positive. First support is near the 50-day average, currently at , then Important support is near the 200-day average, currently at Bottom Panel: Volume and On-Balance-Volume Volume and On-Balance-Volume are showing signs of accumulation, a technical positive (see blue circle and blue arrow). 15 October

47 Industrials (Railways) Canadian Pacific Railway (TSX: CP) Figure 84: CP Weekly (3 Years) Figure 85: CP Daily (9 Months) Top Panel: MACD The stock recently triggered a new weekly mechanical buy signal, a technical positive (see blue circle). Second Panel: SCTR Relative strength is reaccelerating versus the TSX, another technical positive (see blue arrow). Third Panel: Price The stock appears poised to test important resistance near A close above this level sees next upside technical target near Bottom Panel: Volume and On-Balance-Volume The stock saw strong selling pressure from May to September, a technical negative (see red arrow). Volume and On-Balance-Volume are beginning to tick up, which suggests the stock is being accumulated, a technical positive (see blue circle). Top Panel: MACD The stock just triggered a new short-term mechanical sell signal, a technical negative (see red circle). Second Panel: SCTR Relative strength is reaccelerating versus the TSX, a technical positive (see blue arrow). Third Panel: Price The stock is stalling near resistance at The recent price patterns suggest further near-term weakness. First support is near , followed by the 200-day, currently at Bottom Panel: Volume and On-Balance-Volume On-Balance-Volume is showing signs of accumulation, a technical positive (see blue arrow). 15 October