TSX Exhibiting Bottoming Behaviour


Author Larry Berman

Posted: 25 July 2012 re-posted from etfcm

The TSX tried to pull off a reversal day after dipping below the 200-day on a bounce back in energy and financials. The TSX is clearly exhibiting bottoming behaviour, but the outlook as we see it is still unlikely to generate much more than another bounce while the risks of a lower low and retest of the 2011 lows is growing, as the US market stumbles and European banks head for new lows as well.

The fact that the energy sector cannot generate a material rally despite the potential for M&A and the recent $15 rally in WTI speaks volumes about the underlying confidence in the market. It does also suggest that people are underinvested in cyclicals and that when the catalyst is a good one, the markets can put in a good rally.

Promise of more QE if needed from the Fed is not enough for the precious metals at this point, but the seasonals are now positive, so a bottom is likely near. We could see one more head fake to the downside before an explosive rally.

 

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