Get started

Outook

What's next for the TSX Composite Index? According to investing.com, the average of 27 analysts polled in April shows year end target forecast of 13550. Weekly RSI is approaching 60, with the upper weekly bollinger band starting to level off. Technically the chart appears to indicate the price trend is now towards the upper side of the trading range and offering a less attractive 'risk-reward' ratio after achieving over 18% return from lows earlier this year. Trading at a PE of 17x forward earnings estimates the index certainly isn't undervalued. However, in comparison to the decreasing global yields in our contemporary world of NIRP, the TSX index remains attractive to the 'buy and hold' investor for it's dividend yield of nearly 3%. Yield hungry investors may continue to bid up the price of the TSX, as it offers a substantial 'risk premium' spread over 10 year government bond yields. The TSX generally shows a very high correlation to the price of oil (at about 90% on the 20 day average). The index will likely continue to closely track the price movements of WTI going forward. The latest price drop in WTI shows weakness in a resistance level of near $50. Note latest weakness against upper bollinger band. Also weekly RSI of 64 is the highest in 8 months. The 'round figure' of $50 also likely serves as a kind of 'psychological' level in the mind of traders. The B.H. rig count has not only stopped falling and flattened out, but actually seems to be rising. A year ago when the rig count stopped falling, WTI dropped sharply to reach new lows. Canadian investors can own the TSX composite index using the iShares E.T.F. trading under the symbol XIC. American investors can buy the iShares MSCI Canada E.T.F which trades under the symbol EWC, offering access to 85% of the Canadian stock market and a lower yield of 2%. I'm interested to hear from any interested TSX traders and investors. Let's get a dialog going! Please do share your thoughts and insights!
TSX:TSX
by dime