Monthly S&P/TSX 60 Market Strategy Update

My last comment on the S&P/TSX market was on June 5, 2012, here.  The Canadian market as represented by the above noted index has moved sideways, albeit in a positive slope.

First here is an updated model price chart of the S&P/TSX Index calculated as at August 3, 2012.

S&P/TSX 60 Index with weekly price bars, EBV Lines (colored lines).

As you can see from the model price chart, the Index is between EBV+2 and EBV+1.  Upside to EBV+2 from Friday’s close being 12.4% and the downside to EBV+1 (5.64%) yielding a good risk reward for investors.

With all the potential financial potholes and possible Euro contagion I don’t see this index crossing into EBV+2 anytime soon.  So to my mind, EBV+2 becomes resistance.  So as the US market moves to EBV+3 (my previous blog), does the Canadian market move to EBV+2?  Yes, I believe so!  As you can see from the percentages, the Canadian market has more room to the upside than its American counterpart, which makes sense because of the cyclical composition of the S&P/TSX 60 Index.

If we have such a move in each market, US’s S&P500 move to EBV+3 and Canada’s S&P/TSX move to EBV+2, by the fall (October, November time frame) future market action with both indexes “at the top of the zone” will be interesting to say the least.  Can’t wait!

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