Another commodity related marker that is testing important support is the TSX-V AKA the dot.VEE AKA the the Venture AKA the CDNX AKA the wild west outpost of Canadian speculation.
We have been following this one every week in NFTRH and also on occasion its ratio to its daddy, the Toronto exchange, which has been flying around in blue sky nominally. TSX includes mostly real companies and many that are not involved in energy, mining or other commodities. You can see the message that has been in play since the last great commodity speculation blew out with silver in early 2011.
This chart is like a junk vs. quality credit spread only for not only Canadian stocks but also for inflationary effects and resulting speculation. Not happening.
If there is to be an inflation trade it a) has given no indication of happening and b) better get started soon.
The TSX Venture index (CDNX) tested important support last week and thus far this week is positive. I actually bought my first ‘.V’ today in a long while. Canada’s TSX is bullish and this is Canada’s wild wild west where speculation is concerned.
TSX-V, weekly chart from NFTRH 287
Was this all just a big boiler room operation by the boyz in Vancouver? The tout in the TSX-V got pretty loud for a while there. Casino patrons seem to be re-thinking their speculative urges. CDNX dropped so hard that it ripped through the bottom Bollinger Band.
The first support is 980.
The ratio of Canada’s Wild Wild West of the resources speculation world (CDNX) to a normal stock index (TSX) indicates that risk has obviously come back on in the resources sector.
It is debatable as to whether TSX-V vs. TSX will break the red downtrend line any time soon and really, it is probably better that it doesn’t. That is because the TSX-V is filled with scammy, pumpy stocks that you don’t want to own.
But its out performance in 2014 is evidence of our theory that the inflation is fanning out to other asset classes as the US stock market is no longer the lone domain of beneficial inflationary policy for all the reasons I hit you (public site readers) with occasionally and NFTRH subscribers, frequently.
Conservative people might wait for the lagging TRIX (yellow shaded) to trigger before jumping into the resources risk pool, but it does appear that something has changed on the macro.
It is probably worth keeping an eye on this speculative playground from Canada. Most of the smart resources people have all but given up on this area due to so many scam stocks and so much legacy financing from the previous bull cycle.
But the chart says that the red dotted resistance line and the red weekly EMA 20 are being dealt with now, amid some modest bullish divergence by MACD and RSI. It would be interesting to see if CDNX can get over this resistance and get a party started.
Personally, I’d prefer sounder commodity exposure than lottery tickets, but…
This index needs to find support soon if Santa is going to come and bring any gifts for those who speculate in this dung heap.
I don’t care about tax loss selling or great stories. For every gem in this index there have got to be 50 pieces of garbage. Stick with quality; that’d be my position. Come to think of it that has been my position for a long time now. With quality getting dumped now too, why even think about this area?
There is a set up for a buying opportunity in play as long as certain parameters remain good. Buy quality when the time comes. Really.