Tuesday, February 11, 2014

Charting the TSX Materials:

In a Getting Technical market letter - Interim Update January 17, 2014 GT1423 – I looked at the TSX Materials – “A direct beneficiary of a low Canadian dollar.”

The TSX listed clone for the S&P/TSX Capped Materials Index is the iShares S&P/TSX Capped Materials Index Fund (XMA). The iShares S&P/TSX Capped Materials Index Fund (XMA) is a basket of 51 stocks related to commodity sensitive issuers, to include gold and base metal miners, potash and lumber companies. See comments Interim Update January 7, 2014 GT1421. The Materials sector is currently about 11.25% of the TSX Composite by weight – well down from the 19% weight just 12-months ago.

The TSX Materials Sector - Sub Sector Breakdown
Industry                                   % of Sector
Metals & Mining                       68.94%
Chemicals                               26.20%
Paper & Forest Products        3.21%
Containers & Packaging         1.33%

The strategy at work back in early January was for a TSX Materials recovery because the late December tax-loss selling was likely the end of a brutal bear that reduced the TSX Materials to a 11% weight of the TSX Composite – down from almost 20% just a year ago. Add in the mechanical–like quarterly be-balance of many portfolio managers who became over-weight in the financial and consumer sectors and under-weight in the materials sector.

Our chart is a weekly plot of the XMA vs. the TSX large cap XIU along with two simple moving averages, There are four bullish technical signals at (A), (B), (C) and (D) – can you identify them?


Anonymous said...

Hi Bill

My best guess
A "head and shoulders"
B "not sure"
C "10 WMA breaking through 40WMA"
d "XMA breaking through XIU"

Purchased XMA with your newsletter review and some "research" from myself. Still lots to learn.


Gettingtechnical.com said...


Very good - OK - (A) is a double bottom (B) is a price break above both 10 & 40 wk MA and (C) is the 10wma crossing above the 40wma and (D) is the relative perform vs. the large cap TSX60 index break to the upside - a very bullish picture

Bill C