Globe editors have posted this research report with permission of Capitalight Research. 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:
As we approach the end of the first quarter of 2024, the U.S markets continue the upleg that began in October 2023. The TSX behaved similarly, except for a short pause in the beginning of the year but then resumed the uptrend in late-February. While the SPX gained 9.4% since the start of the year, the TSX gained half this amount at 4.7%. However, both have performed very well since their October-2023 lows with a 26% appreciation for the SPX and 17% for the TSX. At this time, both markets continue to have a comfortable buffer between current price levels and their respective 10wMAs (which is a good indicator of short-term support). The SPX 10-week Moving Average (10wMA) currently rests at ±4950 and the TSX at ±21,200. A decline below these levels would suggest a correction toward the January lows. ...
Technically, the 40wMA tends to act like a magnet in the long-term, meaning that the price tends to revert toward the average. However, overbought conditions can persist for extended periods of time. Be that as it may, the further the indices rise above the average, the more likely they are to experience either a correction in “price” (decline) or “time” (trade horizontally). The SPX is currently about 4% above its 10wMA and 12% above its 40wMA; meanwhile the TSX is 3% above its 10wMA and 7% above its 40wMA.
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Monica Rizk