Shorting The TSX, Chart Study and HXD Update

 

 

In early October we presented a case for shorting the Toronto Stock Exchange via HXD.

HXD is the Horizon S&P/TSX 60™ -2x Daily Bear ETF which "seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to two times (200%) the inverse (opposite) of the daily performance of the S&P/TSX 60™ Index. The Index represents the large cap universe for Canada by offering exposure to 60 of the largest companies on the Toronto Stock Exchange."

That trade didn't work out. 

We lost 3.75% on it and since then we've had a buy stop to re-enter HXD.

In January we lowered the buy stop on HXD to $6.95

Today we present another chart study of the Toronto Stock Exchange S&P Composite.

First a Monthly chart:

The red line at the top indicates a trend of resistance and the sloped black lines show that each of the past 5 major rallies, including the current one, have had essentially the same trajectory. 

We've also noted in blue that the last two major rallies were roughly 3 years long, and it's been 3 years since the last major top.

Next we present a weekly chart:

On this chart we see that commonly when weekly momentum crosses down, as indicated by the red arrows, and a steep upward wedge is broken (red and black lines), the index tanks. 

This did not happen in October of last year, as the market turned higher after the U.S. election, however now weekly momentum has crossed back down (red circle in lower right), and we note a steep upward wedge broken, so we should see our HXD purchase trigger soon and we expect it to go far higher than our $6.95 buy stop.

 

 

 

 



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