by Ryan Lewenza, CFA, CMT, Private Client Strategist, Raymond James
After taking a bit of a hiatus, the Technically Speaking report is back up and running. The report will now go out once a month (mid-month) and focus on the big picture technicals of the equity, commodity, currency and bond markets.
Highlights of today’s report include:
• The S&P/TSX Composite Index (S&P/TSX) has traded in an upward channel since its December lows. However, the S&P/TSX continues to face stiff technical resistance around the 15,525 level. For now, we’re neutral on the S&P/TSX as it’s trapped within the 200-day moving average (MA) and horizontal price resistance.
• The S&P 500 Index (S&P 500) has been trading in a “rising wedge” pattern for much of the last year. It is quickly approaching the apex, so we soon expect a resolution of this pattern. We remain constructive on the S&P 500 with the index in well-defined uptrend.
• WTI oil prices recovered sharply in April, surprising many who were calling for US$20-$30/bbl (not us!). In the short-term, momentum looks stretched with an RSI reading of 66 and an elevated MACD level . As such, we expect some backing and filling to work off the short-term overbought condition.
• Copper prices have recovered sharply since the January lows, with copper breaking above its intermediate downtrend and 200-day MA. However, copper prices look extended in the short-term with an elevated RSI reading. We expect some short-term profit taking in copper prices.
• The gold price has done little over the last year, as it consolidates between US$1,140/oz. and roughly US$1,300/oz. Seasonal trends begin to improve during the summer, but we see continued range bound trading for gold over the next few months.
• There has been a dramatic sell off in government bonds over the last two weeks. For example, the US 10-year Treasury yield has risen 40 bps since mid-April. However, in the short-term, US Treasuries are oversold and we expect a trading bounce.
• Canadian utilities have sold off in recent days on the back of higher government bond yields. Utilities could experience a rally in the short-term; however, we would look to reduce utilities exposure into strength, as we see government bond yields moving slowly higher over the next 9 to 12 months.
• The S&P/TSX Capped Health Care Index has recently pulled back to its 50-day MA helping to work off the overbought condition. With the sector continuing to outperform the broader market we would use the weakness to add exposure. We added Valeant Pharmaceuticals (VRX-T) to our Guided Growth Portfolio on May 1, 2015.
Read/Download the complete report below:
Technically Speaking - May 13, 2015
Copyright © Ryan Lewenza, CFA, CMT, Private Client Strategist, Raymond James
