Here are highlights from the latest Technical Take, prepared by Ryan Lewenza, North American Equity Analyst, TD Wealth
Highlights
• The S&P/TSX Composite Index (S&P/TSX) has traded in a narrow range between 14,200 and 14,400 for nearly one month now. In our opinion, the S&P/TSX is in this holding pattern because it is: 1) digesting an impressive 4.8% year-to-date (YTD) gain; and 2) trading at its horizontal price resistance. We continue to believe that the S&P/TSX will head modestly lower in the short term, possibly declining to between 13,850 and 14,000.
• The S&P 500 Index (S&P 500) remains in a long-term upward channel, as it continues to make higher highs and higher lows. It is trading above its 50-week simple moving average (MA) and its 65-week exponential MA. Finally, the NYSE Advance/Decline (A/D) line continues to trend higher, showing no signs of a divergence with S&P 500 price action. Given these bullish technical trends, we maintain our constructive long-term outlook for U.S. equities.
• The technical outlook for the U.S. financials sector remains bullish with the sector in a long-term uptrend, and above its rising 50- and 200-day MAs. Its relative trend, however, had been trending lower since August 2012, but this reversed last week, ending its seven-month relative downtrend.
• In this week’s report, we highlight Constellation Software Inc. (CSU-T), Precision Drilling Corp. (PD-T), Bank of America Corp. (BAC-N), and Comerica Inc. (CMA-N) as attractive buy candidates and recommend investors trim/sell Canadian Imperial Bank of Commerce (CM-T).
Chart of the Week – The 2-year Treasury yield surged 10 basis points following the Federal Reserve (Fed) meeting on March 19. We believe this could signal the beginning of the normalization of U.S. Fed monetary policy.
Read/Download the entire report in the deck below:
