Canada Stocks Close Lower; Momentum Turns Negative as Price Action Forms and Outside Day

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Canada's main stock market, the Toronto Stock Exchange closed lower on Tuesday as investors took profits after the index hit an intraday 6-year high. Most sectors were lower, led down by Energy and Metals and Mining but Health Care bucked the Trend.

Of commodities, gold prices ended the U.S. day session slightly higher, having hit a 10-week high overnight on continuing safe-haven demand and technical buying based on futures trading above key moving averages. But traders and analysts surveyed by Bloomberg News reportedly aren't expecting the euphoria to last. Bloomberg noted volatility in futures is near a four-year low, at a time when trading volumes and open interest in Comex contracts are waning.

Brent crude for August settlement rose 0.4% amid concerns about violence in Iraq while West Texas Intermediate traded near US$106 in New York.

The technical picture for the TSX is not pretty. The TSX created an outside day Tuesday. This occurs when the high is higher than the prior day's high and the close is lower than the prior day's close.

The TSX has been printing an RSI (relative strength index) reading above the overbought trigger level of 70 since June 12. The RSI is moving lower along with price action which reflects accelerating negative momentum, while printing at 70, which is still in overbought territory.

Momentum on the TSX has turned negative with the short term MACD (moving average convergence divergence) index has generated a sell signal. This occurs when the spread (the 5-day moving average minus the 13-day moving average) crosses below the 6-day moving average of the spread.



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This article appears in: Investing , Commodities

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