Technical Analysis – Chart-of-the-Day – Spotlight on the S&P/TSX Composite Index

For the first time ever, it has closed above 20,000!

eResearch | The S&P/TSX Composite Index (“S&P/TSX” or the “Index”) has reached a milestone. For the first time ever, it has closed above 20,000! From the March 2020 low, the Index has gone almost parabolic, with just a brief pause in September – October last year. This kind of relentless upward move usually ends with a pull-back, often resulting in a significant retraction. Downside support sits at 18,000.

CHART 1: Ten-Year Chart: S&P/TSX Composite Index
CotD-Chart1-TSX
Source: BigCharts.com

The S&P/TSX closed on Friday, June 4, 2021 at 20,029.19. (Its intra-day high was 20,050.36.) To reach a close of 3% above the 20,029 reading would be 20,630. (See arrow below.)

CHART 2: One-Year Chart: S&P/TSX Composite Index
TSX-One-Year
Source: BigCharts.com

Observation: In the one-year chart shown above, the arrow denotes 20,630, which is 3% above Friday’s closing price.

Chart 3: Two-Year Chart: S&P/TSX Composite Index
TSX-Two-Year
Source: BigCharts.com

Observation: In the two-year chart shown above, the rising trend-line (Green line) that started in March 2020 at the beginning of the COVID-19 pandemic is still intact, meaning the bullish market that began a year ago March could drop about 400 points from here and still be valid. So, the Index has a useful buffer in place.

CONCLUSION: We remain cautious towards the market and recommend defensive positions. Given the recent strong upward movements in stock prices, we would welcome over the summer months a lengthy consolidation period or a meaningful, but healthy, pull-back.


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About Bob Weir 3242 Articles
Bob Weir has over 50 years of investment research and analytical experience in both the equity and fixed-income sectors, and in the commercial real estate industry. He joined eResearch in 2004 and was its President, CEO, and Managing Director, Research Services until December 2018. Prior to joining eResearch, Bob was at Dominion Bond Rating Service (DBRS).