Canada's TSX is an interesting index. The stocks listed in it represent roughly 70% of the market cap of all publicly traded Canadian companies. For perspective, the last data I could find puts the S&P 500 at around 83% in the US.
As with many indices, it formed a nice wedge from the March lows, but there are some special differences here: the island top reversal (circled) that we see on some of the US indices was promptly closed just four trading days later, though the peak of that no-longer island remains the high point of the first counter rally of this bear market.
And furthermore, because the counter rally that has formed after that peak has been so strong, the trend line formed from the February high to the June high, which remains intact on the S&P and Dow and others, has been breached on the TSX. Perhaps that means that the actual initial channel that is formed when we do drop will be less steep than those that form in the US markets I have indicated that potential channel with the red line.
On the long-term chart (below), I see two very interesting things. We may have, like the S&P 500 and Dow, a broadening formation on the TSX. If the markets deteriorate, I would expect for us to aim for that lower channel, but: there is a very strong, multi-decade trend line that is fully intact (orange).
As you can see on the S&P 500, the Great Financial Crisis killed that same trend line:
It will be very interesting to see if that can hold, given that it stands in between where we are at now, and the bottom of that broadening formation.
As with many indices, it formed a nice wedge from the March lows, but there are some special differences here: the island top reversal (circled) that we see on some of the US indices was promptly closed just four trading days later, though the peak of that no-longer island remains the high point of the first counter rally of this bear market.
And furthermore, because the counter rally that has formed after that peak has been so strong, the trend line formed from the February high to the June high, which remains intact on the S&P and Dow and others, has been breached on the TSX. Perhaps that means that the actual initial channel that is formed when we do drop will be less steep than those that form in the US markets I have indicated that potential channel with the red line.
On the long-term chart (below), I see two very interesting things. We may have, like the S&P 500 and Dow, a broadening formation on the TSX. If the markets deteriorate, I would expect for us to aim for that lower channel, but: there is a very strong, multi-decade trend line that is fully intact (orange).
As you can see on the S&P 500, the Great Financial Crisis killed that same trend line:
It will be very interesting to see if that can hold, given that it stands in between where we are at now, and the bottom of that broadening formation.