Globe editors have posted this research report with permission of Phases & Cycles Inc. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:
The small degree of optimism we had about a possible major reversal of fortune for the Toronto market evaporated last week on the back of New York's decline and renewed weakness in the energy and bank sectors. Toronto re-confirmed its downtrend with a close below 13,000. With its 200-day moving average now firmly pointed down, the S&P/TSX composite index has the potential for lower targets, at least to the 12,500 level that was the starting point for Toronto's last major up leg in June 2013.
But Toronto does have a possible life jacket. Measures of internal strength such as internal momentum and the number of stocks making new 52-week lows have not confirmed the recent lows. A final selling wave to flush out weak holders of stocks, coupled with a late-year turnaround in New York, could allow Toronto to have at least a recovery rally.
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