TSX turned negative after making fresh highs

Image Souce: Krish Capital Pty Ltd

 Index Update: The Canadian market rose to a new record high Monday morning but retreated soon and stayed weak right through the session. The benchmark S&P/TSX Composite Index, which hit a new record high at 24,922.92 in early trades, ended the session with a loss of 99.21 points or 0.4% at 24,723.33.

Macro Update: The Canadian central bank is widely expected to reduce its key policy rate by 50 basis points, marking its fourth cut in a row.

Top Movers: RB Global (RBA.TO) climbed 6.6%. Hut 8 Corp (HUT.TO) ended nearly 6% up. Brookfield Renewable Corporation (BEPC.TO) and MAG Silver Corp (MAG.TO) gained about 5% and 4.7%, respectively. Magna International (MG.TO), goeasy (GSY.TO), Teck Resources (TECK.A.TO), BRP Inc (DOO.TO), Cargojet (CJT.TO) and Stella-Jones (SJ.TO) ended lower by 2 to 3.6%.

Our Stance: 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 73.96, suggesting the market may be in overbought territory. Key technical levels are in focus, with immediate support at 23,920. Holding above this level could pave the way for a rebound, while a breach could signal a deeper correction, with potential support zones at 23,400 and 23,000.

Commodity Update: On Tuesday, the U.S. dollar remained strong at a two-and-a-half-month high, driven by expectations of a cautious approach to interest rate cuts by the Federal Reserve. At the same time, uncertainties surrounding the upcoming U.S. election kept investors alert. In the commodities market, gold rose 0.27% to $2,745.15 per ounce, silver climbed 0.42% to $34.42, and copper increased by 0.35% to $9,605.50 per ton. However, Brent crude futures dipped 0.3% to $74.03 amid renewed calls for a ceasefire in the Middle East and ongoing sluggish demand from China, the world's largest oil importer.

Technical Update: On Monday, the S&P/TSX Composite Index closed at 24,723.33, marking a modest decline of 0.40%. The technology sector took the brunt of the pressure, falling by 0.72%, 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 73.96, 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 23,920. Holding above this level could pave the way for a rebound, while a breach could signal a deeper correction, with potential support zones at 23,400 and 23,000. 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.