Canada Market Round-Up

The benchmark S&P/TSX Venture Composite Index (TSX: ^JX) started the week negatively and remained volatile throughout the week. On November 10, 2022, the index closed at 594.69 with an overall week-to-date (WTD) gain of 0.17%. Energy, Industrial, Healthcare, Base Metals, Battery Metals, Technology, Utilities, Financial and Telecom were the leading sector on Thursday.

As per the daily chart analysis, the index is taking support from a falling trendline, indicating the possibility of an upside movement hereon. The leading indicator RSI (14-period) is below the mid-point and shows a reading of ~37.22. Furthermore, the prices are trading below the 21-period and 50-period SMA, which may act as the dynamic resistance levels in the near term.  

Global Markets Wrap-Up 

On November 10, 2022, the S&P 500 index settled at 3956.38 with a WTD gain of ~4.93%, and the tech-heavy NASDAQ composite inclined by ~6.10% on a WTD basis and settled at 11114.15, whereas Russell 2000 settled at 1867.93, reflecting a gain of ~3.78% 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, one TSX-listed stock fits the criteria on the technical framework: Sherritt International Corporation (TSX: S). The recommendation on this stock is based on the generic insights, entry price, target prices, and stop-loss for the next 2-6 weeks.­­

Sherritt International Corporation

Sherritt International Corporation (TSX: S) is engaged in the mining and refining nickel from lateritic ores with projects and operations in Canada, Cuba, and North America. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart)

Sherritt International Corporation stock 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 0.585, and the price may test this level in the short term (2-6 weeks). A further movement above CAD 0.585 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 50-period SMA. The leading indicator RSI (14-period) is in positive territory and shows a reading of 67.86, 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, Sherritt International Corporation 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.

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 Index of Consumer Sentiment, Empire State Manufacturing Survey, Producer Price Index, Core Retail Sales,  etc. The upcoming week's major global economic events that could impact the S&P/TSX Venture Composite Index and listed stocks' prices are noted below.

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 November 10, 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

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