Canada Market Round-Up

The benchmark S&P/TSX Venture Composite Index (TSX: ^TSXV) started the last week on a negative note. The S&P/TSX Venture composite index declined by 30.07 points 4.65% to 617.26 for the week ending on July 01, 2022. On July 07, 2022, the index closed at 614.20, increased by 11.85 points or ~1.97%. The weekly chart indicates that the index prices are trading above the horizontal resistance turned support levels, indicating the possibility of consolidation at the lower levels. However, the prices are trading below the 21- period & 50-period SMA, which can act as resistance in the near term for the index. Energy, Financial, Utilities, Technology, Healthcare, Industrial, and Battery Metals were the leading sectors, while Telecom was the laggard on Thursday. The immediate resistance for the index is around 645, while the immediate support exists at around 585 levels. On the weekly period, RSI is pointing at ~23.413 levels, which is close to the oversold territory and any bounce from here can take the index towards the north.

On the macro front, the upcoming major economic events that may impact the Canadian market sentiment include Unemployment Rate, Non-Farm Employment Change, Consumer Price Index, BOC Monetary Policy Report, and Producer Price Index.

Global Markets Wrap-Up 

On July 07, 2022, the S&P 500 index settled at 3902.62 with a WTD (week till date) gain of ~2.02%, and the tech-heavy Nasdaq composite, increased by ~4.52% (WTD) and settled at 12109.05, whereas Russell 2000 ended the week at 1769.60, reflecting gains of ~2.42%.

Considering the US market's performance over the last week, following the major global macros and data front, and analysing the S&P/TSXV Composite Index, two TSXV stocks fit the maximum criteria on the technical framework. The recommendations are based on the generic insights, entry price, target prices, and stop-loss for IMPACT Silver Corp. (TSXV: IPT) and Southern Energy Corp. (TSXV: SOU) for the next 2-6 weeks.

IMPACT Silver Corp.

IMPACT Silver Corp. (TSXV: IPT) and its subsidiaries participate in silver mining and related tasks in Mexico, such as development, exploration, and mineral processing.  The company operates a series of mines near Zacualpan in the state of Mexico and Guerrero state and produces silver, lead, zinc, and gold sold in the form of lead and zinc concentrates. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

On the weekly chart, IPT’s price is trading above the horizontal support line, indicating the possibility of upside hereon. The stock price has recently started to form an inverted hammer candlestick pattern on the weekly chart, showing a pause to further decline from current levels. The next resistance level is plotted around CAD 0.36, and the stock may test that level in the short term (2-6 weeks).

Technical Analysis (On the Weekly Chart)

On the weekly chart, The CMP (current market price) is below the trend-following indicator 21-period SMA and 50-period SMA. The leading indicator RSI (14-period) is also reversing from lower levels and is currently at the 34.03 level. The weekly volumes also seem supportive of an upside movement.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, IMPACT Silver Corp. is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decision 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.

Southern Energy Corp

Southern Energy Corp. (TSXV: SOU) is a corporation that explores for and produces oil and gas. Its focus is on acquiring and developing light oil and conventional natural gas resources in East Texas, Mississippi, and the Southeast Gulf States. Petroleum and natural gas sales are its main sources of income. Noted below are the key price indicators for the stock:

Price Action Analysis (on the weekly chart)

On the weekly chart stock price of SOU is trading above the horizontal support line and formed a Doji candlestick pattern, showing a pause to further decline from current levels. The weekly volumes also seem supportive, further indicating positive biasness coming into the price action. The next resistance level is plotted around CAD 0.975, and the stock may test that level in the short term (2-6 weeks).

Technical Indicators Analysis (On the weekly Chart)

On the weekly chart, The CMP (current market price) is above the trend-following indicator SMA 50-period SMA, which may act as a support level for the stock. The leading indicator RSI (14-period) is currently pointing at 48.35 levels.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, Southern Energy Corp. is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decision 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 the 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 updates on Gross Domestic Product (GDP), Manufacturing PMI, 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.

Note : Investment Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are 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: 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 downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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 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, volumes, technical indicators, support, and resistance levels is July 07, 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 individual. Technical reports in general chart out metrics that may be assessed by individual 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.