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Image Souce: Krish Capital Pty Ltd
Index Update: Despite posting a new all-time high around mid-morning, the Canadian market ended on a negative note on Monday, due to sharp losses in energy and materials sectors. The benchmark S&P/TSX Composite Index ended down 33.93 points or 0.13% at 25,410.35.
Macro Update: On the economic front, data from Statistics Canada said manufacturing sales in Canada likely rose by 1.3% month-over-month in October, rebounding from a 0.5% decline in September against expectations of a 0.8% drop, according to preliminary estimates.
Top Movers: Richelieu Hardware (RCH.TO), Aritzia Inc (ATZ.TO), Shopify Inc (SHOP.TO), Magna International (MG.TO), Bombardier Inc (BBD.B.TO), MTY Food Group (MTY.TO), Onex Corporation (ONEX.TO), Linamar Corporation (LNR.TO), FirstService Corporation (FSV.TO) and Canadian Tire Corporation (CTC.A.TO) gained 2.3 to 5%.
Our Stance: The Relative Strength Index (RSI) is now at a relatively high 70.07, suggesting the market may be in overbought territory. This could point to a potential softening in momentum, and traders should watch closely for signs of a shift in market dynamics. Key technical levels are in focus, with immediate support at 24,900. Holding above this level could pave the way for a rebound, while a breach could signal a deeper correction, with potential support zones at 24,500 and 24,200.
Commodity Update: The U.S. dollar strengthened against major currencies on Tuesday following President-elect Donald Trump’s announcement of new tariffs: a 25% levy on goods from Mexico and Canada, and an additional 10% on Chinese products, citing concerns over illegal immigration and drug trade. In commodities, gold rose 0.37% to $2,652.70 per ounce, while silver gained 0.42% to $30.78 per ounce. Copper fell by 0.33% to $9,024.50 per ton. Brent crude dropped 0.33% to $72.73 per barrel after reports that Lebanon and Israel reached an agreement to end the Israel-Hezbollah conflict, triggering an oil selloff. Investors await U.S. GDP data this week for further direction.
Technical Update: On Monday, the S&P/TSX Composite Index closed at 25,410.35, marking a decline of 0.13%. The energy sector took the brunt of the pressure, falling by 1.78%, which weighed on the broader market sentiment. Despite the pullback, the index remains comfortably above its 21-period Simple Moving Average (SMA), signaling that the short-term uptrend is still intact. However, the Relative Strength Index (RSI) is now at a relatively high 70.07, suggesting the market may be in overbought territory. This could point to a potential softening in momentum, and traders should watch closely for signs of a shift in market dynamics. Key technical levels are in focus, with immediate support at 24,900. Holding above this level could pave the way for a rebound, while a breach could signal a deeper correction, with potential support zones at 24,500 and 24,200. As we move forward, market participants will likely be cautious, balancing optimism with the need for caution given the mixed signals in both the broader market and individual sectors.