SIA Weekly: What's Ahead for U.S. and Canadian Equities?

December 29, 2016

3 minute read

For our last Equity Leaders Weekly of 2016, we thought we would do a quick update on both the US and Canadian equity markets via the S&P 500 Index (SPX.I) and the S&P/TSX Composite Index (TSX.I). 2016 has been an eventful year for the markets where we started the year in risk off mode with a large sell off in equities around the globe. This sell off in equities brought strength to both bonds and other safe haven assets which had strong runs earlier in the year. We saw the USDCAD spike to over $1.40 and then have a strong pull back all while oil was trying to rally from its bottom formation. The markets weathered a surprise Brexit, as well as responding positively to the somewhat surprise election victory for Donald Trump in the United States.

S&P 500 Index (SPX.I)

Since we last spoke of the S&P 500 at the end of November we can see in the chart that the index has added another X, continuing to push through on to all-time highs. Since the election, the S&P 500 Index has been up as high as 2,271 in mid December, having somewhat leveled off recently to close at 2,249.92 on Wednesday. The SPX.I chart is still in its column of X’s where the next level of resistance to come into play is at around 2,350 and above this at ~2,500. Support for SPX.I will come at the prior resistance level of 2,151 and below this at ~2,000 and ~1,800. With an SMAX of 8 out of 10, SPX.I is showing near term strength versus the asset classes.

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S&P/TSX Composite Index (TSX.I)

Without any major market shock, the TSX Composite Index is looking to close the year out deep in the green returning ~18% which would be the index’s best year since 2009. After a sharp pull back to begin 2016 the Canadian market was set to make a run on the back of major commodities like oil and natural gas, financials, and both precious and base metals. In looking at the 2% chart, the TSX.I has been in a long column of X’s since late January and is now trying to get past some very strong resistance levels between 15,500 and all-time highs at 15,791. Downside support for TSX.I can be found at 14,000 and below at 12,700. With an SMAX of 7 out of 10, TSX.I is showing some near term strength versus the asset classes.

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