TSX recovers to close on a flat note

Image Souce: Krish Capital Pty Ltd

Index Update: Following a shaky start and a further dip to lower levels, the Canadian market gradually recovered on Tuesday before settling modestly lower. The benchmark S&P/TSX Composite Index ended down 6.63 points or 0.03% at 24,716.70.

Macro Update: Data from Statistics Canada showed industrial producer prices in Canada fell by 0.6% over a month in September, following a revised 0.9% decline in the prior period. On a yearly basis, producer prices fell by 0.9% in September, after a 0.2% rise in the prior month.

Top Movers: Healthcare stock Tilray Inc (TLRY.TO) gained about 7.3%. Seabridge Gold (SEA.TO), up 6%, was the biggest gainer in the Materials index. Sandstorm Gold (SSL.TO) climbed 5.7%. Ssr Mining (SSRM.TO), First Majestic Silver (AG.TO), Pan American Silver Corp (PAAS.TO), Triple Flag Precious Metals (TFPM.TO) and Fortuna Silver Mines (FVI.TO) gained 3 to 5%.

Our Stance: However, with the Relative Strength Index (RSI) reaching a relatively high of 73.59, there are signs that the market may be entering overbought territory, suggesting a potential softening in momentum. Traders should monitor this closely for any shifts in market dynamics. Key technical levels to watch include immediate support at 23,920.

Commodity Update: Gold prices reached a record high on Wednesday, while the dollar strengthened as investors remained cautious ahead of the contentious U.S. election. Uncertainty surrounding the Federal Reserve's plans for interest rate cuts weighed on risk sentiment. After peaking, gold slipped 0.25% to $2,753.00 per ounce, silver fell 0.83% to $34.75, and copper decreased 0.48% to $9,578.00 per ton. Brent crude futures dropped 0.4% to $75.75 a barrel, impacted by rising U.S. oil inventories, while U.S. diplomatic efforts in the Middle East continued to attract market focus.

Technical Update: On Tuesday, the S&P/TSX Composite Index closed at 24,716.70, reflecting a modest decline of 0.03%. The utilities sector was the primary contributor to this pullback, falling by 0.60%, which impacted on overall market sentiment. Despite this dip, the index remains well above its 21-period Simple Moving Average (SMA), indicating that the short-term uptrend is still intact. However, with the Relative Strength Index (RSI) reaching a relatively high of 73.59, there are signs that the market may be entering overbought territory, suggesting a potential softening in momentum. Traders should monitor this closely for any shifts in market dynamics. Key technical levels to watch include immediate support at 23,920. A sustained hold above this level could set the stage for a rebound, while a breach might indicate a deeper correction, with support zones identified at 23,400 and 23,000. As the market moves forward, participants are likely to adopt a cautious approach, balancing optimism with the awareness of mixed signals across the broader market and individual sectors.