Canadian Stocks Pull Back Amid Profit Taking

Image Source : Krish Capital Pty Ltd

Index Update:  After opening at 30,005.73, the benchmark S&P/TSX Composite Index progressed to a new intraday high of 30,066.60 within a couple of hours. Then the index turned lower to trade firmly negative and closed at 29.815.63, down by 143.35 points (or 0.48%).

Macro Update:  On the economic front, the day was uneventful except for data released by Statistics Canada today which revealed that new housing prices fell 0.3% month-over-month in August, marking the fifth consecutive monthly decline. A 1.6% contraction in GDP during the second quarter of 2025 and a 27% decline in exports along with a cooling employment market prompted the BoC to initiate the easing.

Top Movers:  Among the individual stocks, Vermillion Energy Inc (4.59%), Arc Resources Ltd (3.11%), Premium Brands Holdings Corp (1.63%), and Brookfield Infra Partners (1.07%) were the prominent gainers.

Our Stance:  The index is holding above its 21-period SMA, reinforcing the prevailing bullish trend. Momentum conditions are still favorable, with the RSI at 75.83, reflecting strong underlying strength. On the downside, the index is testing a key support zone near 29,600. A decisive break below this level could open the door to a deeper retracement, with subsequent supports at 29,400 and 29,300. Sustaining these levels will be critical to preserving the near-term bullish structure.

Commodity Update:  The U.S. dollar firmed from near one-week lows on Wednesday as traders priced in two more rate cuts this year, despite Fed Chair Jerome Powell’s cautious stance. Gold dropped 0.73% to $3,787.50, silver fell 0.98% to $44.17, and copper eased 0.09% to $9,982.10. Brent crude rose 0.40% to $67.88, supported by stalled Kurdish oil exports, a bigger U.S. inventory draw, and rising geopolitical tensions around Russia.

Technical Update:

The S&P/TSX Composite Index slipped 143.35 points (−0.48%) on Tuesday to close at 29,815.63, as weakness in technology stocks (−2.98%) weighed on sentiment. Despite the pullback, the broader technical outlook remains constructive. The index is holding above its 21-period SMA, reinforcing the prevailing bullish trend. Momentum conditions are still favorable, with the RSI at 75.83, reflecting strong underlying strength. On the downside, the index is testing a key support zone near 29,600. A decisive break below this level could open the door to a deeper retracement, with subsequent supports at 29,400 and 29,300. Sustaining these levels will be critical to preserving the near-term bullish structure.