FXM (Canada) - Super Steady Canadian Bargain Buys

Mar 10

The CI Morningstar Canada Value Index ETF has had a great run over the last year with a gain of nearly 60%. When a broad fund moves like this, it shows there is real momentum in the market. This ETF tracks undervalued and highly liquid Canadian companies, mostly leaning into the materials, financials, and energy sectors. It has been in a strong, steady uptrend for months and has largely ignored the deeper pullbacks the wider global market has been having.

The underlying strength here is largely driven by a broader market rotation into value stocks and a supportive environment for Canadian resources. Precious metals have had a strong start to the year, and the big Canadian banks remain fundamentally solid. Those areas make up a huge part of this fund. The recent dip from the all-time highs looks like normal profit-taking and a reaction to the wider global markets increased uncertainty.

From a technical perspective looking at the chart, the price action is setting up exactly as expected. After topping out above the $40 mark, the price has pulled back and is resting right below the 20-day SMA. This is the green line on the chart, and it often acts as short-term support in a strong trend. This pullback brings the price back into a much better value area. The RSI has dropped out of overbought territory and is back to a neutral 52 but most interestingly, looking along the RSI line it has petty reliably bounced from this level and headed back up. The MACD histogram is red, showing the upward momentum has slowed down to let the market digest the recent gains.

If you like slow and steady and think Canadas economy is headed in the right direction, this could be one to keep an eye on.

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Mar 12

Note

It tried to push past that 20 day MA but rejected off it again. Will need a bit longer.