Charting Canada: The TSX Composite / S&P 500 Ratio

June 25th, 2013

by Doug Short

Last August Serge Perreault, whose weekly technical snapshots of the S&P 500 are a regular feature on this website, sent me a fascinating ratio chart of Canada's TSX divided by the S&P 500 S&P 500.

Here is another look at that original chart from August 27, 2012.

At the time Serge commented:

Relative to the S&P 500, this 3 year weekly chart shows that the TSX is in a downtrend formation, on falling momentum. What this means is that "smart money" gets out of more risky markets (such as the TSX which is heavy in Resources related stocks) before getting out of the less risky ones (such as the S&P 500). But, take note too that the reverse is also true ("smart money" gets in more risky markets first).

Last night Serge sent an update, which underscores accuracy of his original observation:

We see in the second chart that, although the downward trend abated for a few months after Serge's 2012 observation, in 2013 it has not only resumed, but accelerated.

Here is a look at the Canadian Index since the turn of the century.

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