Canadian stocks are down about 2.5% on the week, 7% since March (and still 22% from their commodities bubble peak in June 2008). This is welcome progress back towards better investment value for the Canadian market. But buoyed by overbought interest sensitive sectors, at this point the TSX remains some 8% above key support around 11,000, and a full 25% above potential secular support in this down cycle. We could easily witness a retracement of that magnitude in the months ahead as the weakening global economy gears down, Central Banks flounder and levered traders are forceably cashed out.
Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
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