Canada Market Round-Up

The benchmark S&P/TSX Venture Composite Index (TSX: ^JX) started the week negatively; however, it remained volatile throughout the week. On October 20, 2022, the index closed at 586.91 with an overall week-to-date (WTD) gain of 1.00%. Energy, Technology,  Base Metals, and Battery Metals were the leading sector, while Industrial, Utilities, Financial, Telecom, and Healthcare were the laggards on Thursday.

As per the weekly chart analysis, the index is facing resistance at a falling trendline, indicating the possibility of further downside movement hereon. The leading indicator RSI (14-period) is below the mid-point and shows a reading of ~35.25. Furthermore, the prices are trading below the 21-period & 50-period SMA, which may act as the resistance levels in the near term.

Global Markets Wrap-Up 

On October 20, 2022, the S&P 500 index settled at 3665.77 with a WTD gain of ~2.31%, and the tech-heavy NASDAQ composite inclined by ~2.84% on a WTD basis and settled at 10614.84, whereas Russell 2000 settled at 1704.39, reflecting a gain of ~1.31% on WTD basis.

Considering the US market's performance over the week, following the significant global macros and data front, and analysing the S&P/TSX Venture Composite Index, two TSXV/TSX stocks fit the criteria on the technical framework: Kraken Robotics Inc. (TSXV: PNG) and Perpetual Energy Inc. (TSX: PMT). The recommendations on these stocks are based on the generic insights, entry price, target prices, and stop-loss for the next 2-6 weeks.­­

Kraken Robotics Inc.

Kraken Robotics Inc. (TSXV: PNG) is a Canada-based company that develops, manufactures, and sells software-centric sensors and underwater robotic systems. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

PNG’s prices witnessed the breakout of a falling trendline and are sustaining above the breakout level, indicating the possibility of further upside move hereon. The next resistance level is plotted around CAD 0.54, and the price may test this level in the short term (2-6 weeks). A further movement above CAD 0.54 may extend buying in the stock.

Technical Analysis (On the Weekly Chart)

On the weekly chart, the current market price (CMP) is above the trend-following indicators 21-period SMA and 50-period SMA. The leading indicator RSI (14-period) is in positive territory and is showing a reading of 61.31, supporting the positive bias. The weekly volumes also seem supportive of an upside movement.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, Kraken Robotics Inc is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decisions should be made depending on an individual's appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of recommendations is as follows:

Markets are trading in a highly volatile zone currently due to certain macroeconomic and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Perpetual Energy Inc.

Perpetual Energy Inc. (TSX: PMT) is a natural gas and oil exploration, production, and marketing company. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart)

PMT’s prices are trading above the horizontal support trendline with decent volumes, indicating the possibility of an upside move hereon. The next resistance level is plotted around CAD 1.14, and the stock may test that level in the short term (2-6 weeks). A further movement above CAD 1.14 may extend buying in the stock.

Technical Analysis (On the Daily Chart)

On the daily chart, the current market price (CMP) is above the trend-following indicators 21-period SMA and the 50-period SMA. Moreover, the momentum oscillator RSI (14-period) is in the positive territory and is showing a reading of ~53.61. The weekly volumes also seem supportive of an upside movement.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, Perpetual Energy Inc. is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decisions should be made depending on an individual's appetite for an upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of recommendation is as follows:

Markets are trading in a highly volatile zone currently due to certain macro-economic and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Upcoming Major Global Economic Events 

Market events occur on a day-to-day basis depending on the frequency of the data and generally include updates on 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 Venture Composite Index and listed stocks' prices.

Related Risks: This report may be looked at from a high-risk perspective and recommendation is provided for a short duration. 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, social and political instability risks etc. 

Note 1: Individuals can consider exiting from the stock if the Target Price or Stop loss mentioned as per the technical analysis has been achieved and subject to the factors discussed above. 

Note 2: How to Read the Charts?

The Green color line reflects the 21-period moving average, while the red color 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 color 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 color 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 stocks with lesser volume. Liquidity in stocks helps in easier and faster execution of the order.

The Orange color 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.

Technical Indicators Defined: - 

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: In general, it is a level to protect further losses in case of unfavorable movement in the stock prices.

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

A trailing stop-loss is a modification of stop-loss in case of favorable movement in the price to protect the gains. Individual can Trail the Stop-Loss as per the levels if the stock price achieves more than 50% of the Target 1. Individual 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, currency, technical indicators, support, and resistance levels is October 20, 2022. The reference data in this report has been partly sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

CAD: Canadian Dollar

RSI: Relative Strength Index 

Note: Trading decisions require a thorough analysis by individuals. Technical reports in general chart out metrics that may be assessed by individuals 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.