SIA Equity Leaders Weekly (November 1, 2012)
Frequently we are asked about the state of the Canadian and U.S. Banks and Financial Services companies. For this weeks Equity Leaders Weekly we are going to take a look at a couple of comparison charts putting the two sectors up against each other.
iShares Dow Jones US Financial vs. iShares S&P/TSX Financial (IYG^XFN.TO)
In the first chart we are comparing the two financial services sectors against each other using a 1% comparison chart. This chart is looking at the shorter timeframe relationship between the two sectors. We can see that the larger trend has been moving downwards in favor of the CAD Financials, but there have been a few movements back towards the downward trendline that have been in favor of the U.S. Financials. Currently the U.S. have now peeked up and through the downward trendline, showing relative strength in favor of the U.S. Financials.
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iShares Dow Jones US Financial vs. iShares S&P/TSX Financial (IYG^XFN.TO)
Knowing what the short term trend is between two positions is always good to know, but it is also important to examine the longer term trend. The chart to the right is comparing the same two ETF's, but this time using a 3% comparison chart, giving us that longer outlook that is required. We can see that going back over 10 years, with the exception of some sideways consolidation or equality between these two, it has been all CAD Financials in terms of relative strength.
Being able to put things into different perspectives can help us to make sure we are always on the right side of the trend and help us to manage our positions. Short term we see favoritism towards the U.S. but the longer term outlook still favors Canada.
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