Rally on TSX continued.
There are signs of waning volume, and some momentum divergence.
TSX has been outperforming S&P for quite some time as you can see from this daily chart. It also has been enjoying better momentum
Still, it has been seriously underperforming Brazil; it has not been the leading commodity-centric index
Breadth has been consistently positive
Also notice that TSX has moved above its 144 MA, well ahead of S&P. The 144 MA is still pointing down, and I will not be overly excited about price being above it at this time.
There are divergences on breadth momentum
And the index is overbought as you can see from dailies above, and also from the chart below
As we can see from the following chart, the breadth of price and volume has been poitedly positive.
If you wonder why then I say volume has been waning, the answer is simple. Advance-Decline volume measures a relationship between the volume of advancing issues versus the volume of declining issues. While advancers can run on better volume than decliners, the overall volume of the shares traded on an exchange may contract. So while the breadth of volume may be positive, the growth of volume may be negative, or stagnant.
Looking at this 60-minute chart
The wave structure looks more impulsive than S&P.
TSX has been enjoying a rally in financials, base metals, and RIMM. Most material and energy related stocks have also firmed up. All of that help more than compensate for the selling in gold stocks.
While I have been a non-committed trader of S&P. I have liked the long side of TSX on pullbacks.
But given waning price momentum, waning breadth momentum, waning volume, This looks like a rally in its later stages of development.
I will not want to start a new long position, and I will trim and or hedge existing positions. At this point, I am not contemplating any plans to short TSX in any meaningful way.
The longer term story, for me, is the same as S&P: I need a pullbak to see what this really was really made of.
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