The Canadian market ended notably lower on Friday

Index Update:  The benchmark S&P/TSX Composite Index, which opened at 25,004.49 and dropped to a low of 24,814.91 around mid afternoon, ended the day's session at 24,890.68 with a loss of 158.99 points or 0.63%. The index posted a modest gain for the week.

Macro Update: Data from Statistics Canada showed manufacturing sales in Canada decreased 0.5% month-over-month in September, less than initial estimates of a 0.8% drop and following a 1.3% fall in August.

Wholesale sales in Canada declined 0.8% month-over-month in September, less than preliminary estimates of a 0.9% rise, and reversing the 0.6% decline in August.

Top Movers: Pollard Banknote (PBL.TO) climbed 10.5%. Vermilion Energy (VET.TO) gained 6.8%. Maple Leaf Foods (MFI.TO) closed up 5.2%. Aecon Group (ARE.TO), CI Financial Corp (CIX.TO), Parklans Corporation (PKI.TO), Imperial Oil (IMO.TO), Precision Drilling Corporation (PD.TO), Agnico Eagle Mines (AEM.TO), Suncor Energy (SU.TO), Brookfield Business Partners (BBU.UN.TO), Boyd Group Services (BYD.TO) and Franco-Nevada Corporation (FNV.TO) gained 2 to 4%.

Our Stance: While the RSI is not yet in oversold territory, the current reading points to potential weakness and raises the likelihood of further declines if the market fails to stabilize. Looking ahead, the 24,300 level is crucial for the index. This level aligns with an important rising trendline, making it an immediate support zone.

Commodity Update: The dollar strengthened against the yen on Monday after Japan's central bank hinted at potential policy tightening, though the timing remains uncertain. U.S. economic data is sparse this week. In commodities, gold rose 0.95% to $2,594.60, silver gained 0.83% to $30.69, and copper climbed 0.70% to $9,380 per ton. Brent crude edged up 0.3% to $71.24 amid the intensifying Russia-Ukraine conflict, though concerns over Chinese demand and a global oil surplus capped gains. Meanwhile, in a policy shift, the Biden administration has approved Ukraine’s use of U.S. weapons to strike deep within Russia, according to sources.

Technical Update: In the most recent trading session, the S&P/TSX Composite Index saw a decline of 158.99 points, closing at 24,890.68, a drop of 0.63%. This pullback was accompanied by a noticeable increase in trading volume, which suggests rising market volatility and growing investor unease. The energy sector was a primary contributor to the negative sentiment, falling 1.14%, likely due to concerns over weaker commodity prices or global economic pressures, which had a broader impact on the overall market. Despite the setback, the index remains above its 21-period Simple Moving Average (SMA), which indicates that the short-term uptrend is still intact. However, the Relative Strength Index (RSI) has slipped to 62.38, suggesting that momentum is starting to wane. While the RSI is not yet in oversold territory, the current reading points to potential weakness and raises the likelihood of further declines if the market fails to stabilize. Looking ahead, the 24,300 level is crucial for the index. This level aligns with an important rising trendline, making it an immediate support zone.