S&P/TSX Composite Index Market Round-Up

Last week, the benchmark S&P/TSX Composite Index (TSX: ^TSX) started on a positive note and maintained an upside momentum in the entire week. On the weekly chart, the Index has a breakout of its horizontal trendline at 18055.20 level and made a new lifetime high of 18527.88 (on February 10, 2021). The Index settled at 18460.21 with an overall weekly gain of ~1.79% for the week ending February 12, 2021. During the Friday trading session, industrials gained 1.47% while academics & educational services lost some ground and declined 1.20%. In addition, the price is trading above the 21-period simple moving average, which is positive momentum. Based on the weekly chart, the immediate resistance level for the Index is at 18810; while the immediate support is at 17720 levels. On the weekly time frame, RSI is trading at ~66.74 levels, further providing strength to the prices.

The index price may test the upside resistance of 18810 levels in the coming trading sessions, considering the strong bullish momentum. The upcoming events that may impact the market sentiments include Canadian CPI m/m, Canadian ADP Non-Farm Employment Change data and Canadian Retail Sales data.

Global Markets Wrap-Up 

The US market witnessed moderate weekly gains last week. S&P 500 posted new 52-week high and settled at 3934.83 with an overall gain of ~1.23%, Dow Jones Industrial Average settled at 31,458.40 with an overall gain of ~0.996 %, the Nasdaq composite was up 239.18 points at 14095.47, while Russell 2000 settled at 2289.36 with an overall weekly gain of ~2.51% for the week ending February 12, 2021.

Global indices flourished last week after taking cues from the improvement in US jobless claims data released by the Labor department of the US. The US claims for jobless benefits decreased last week to 793,000 from 812,000 recorded in the prior week. In addition, there are also expectations that the congress would announce another fiscal stimulus package in-line with President Joe Biden’s USD 1.9 trillion proposal, which also supported the positive bias.

Having understood the US market performance over the past one week, taking cues from major global news, and based on our technical analysis of S&P/TSX Composite Index for the upcoming week, now let us have a look at the two TSX listed stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Gibson Energy Inc. (TSX: GEI) and First Capital Real Estate Investment Trust Units (TSX: FCR.UN) for the next 2-4 weeks duration.

Gibson Energy Inc

Gibson Energy Inc. (TSX: GEI) is a Canada-based integrated service provider company to the oil and gas industry.  The Company is engaged in the business of movement, storage, blending, processing, marketing and distribution of crude oil, condensate, natural gas liquids (NGLs), and refined products, etc.

Price Action Analysis (on the Weekly Chart)

GEI stock price has broken out of its falling wedge pattern at CAD 20.80 level on the weekly chart. After consolidating in the range for more than 9 months, the price registered a decisive breakout that suggests a change in trend from sideways to bullish. The price was able to hold the major support of the upward sloping trend line of CAD 18.45 level on the weekly chart. Now, the next resistance level appears to be at CAD 25.20 and the stock, in the short term (2-4 weeks), prices may test that level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the momentum oscillator RSI (14-Period) is trading at ~51 levels, which supports bullish bias for the stock. The stock prices are placed well above both the 21-period SMA and 50-period SMA, which is indicating the positive trend for the stock.

Financial Summary:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Gibson Energy Inc. is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investor’s appetite for upside potential, risks and any previous holdings. This recommendation is purely based on technical indicator analysis, and fundamental analysis has not been considered in this report.  

Summary of our recommendation is as follows:

First Capital Real Estate Investment Trust Units 

First Capital Real Estate Investment Trust Units (TSX: FCR.UN) is a TSX-listed real estate company.  The company is engaged in the business of acquiring, developing, redeveloping, owning and managing mixed-use urban real estate. 

Price Action Analysis (on the Weekly Chart)

On the weekly chart, FCR.UN stock price has broken out of its ascending triangle pattern at CAD 14.03 level, indicating the bullish momentum in the price. Price chart suggests that after the breakout, prices took the support of upper band of the pattern and since then, prices are sustaining above the support level. The next important resistance level appears to be at CAD 16.90, and prices may test the level in the 2-4 weeks duration. Any further breakout above the CAD 16.90 accompanied by volume may extend buying in the stock. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the momentum oscillator RSI (14-Period) is trading at ~53.72 levels, indicating a bullish momentum in the prices. The increasing volume trend, along with an increase in the stock’s price action further indicates the bullish trend. The stock closed above the 21-period SMA and 50-period SMA, further, providing strength to the prices.

Financial Summary:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that First Capital Real Estate Investment Trust Units is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investor’s appetite for upside potential, risks and any previous holdings. This recommendation is purely based on technical indicator analysis, and fundamental analysis has not been considered in this report.

The summary of our recommendation is as follows: 

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the S&P/TSX Composite Index and listed stocks’ prices.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00); however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, and social and political instability risks etc.

Entry Price: For the given recommendation(s), Entry Price is assumed be at or above a certain level. However, a slight deviation on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated. 

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than the stocks with lesser volume and we consider stocks with greater than or equal to 200,000 volumes as more liquid. Liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is February 12, 2021. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

CAD: Canadian Dollar

RSI: Relative Strength Index 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.