Oh Canada!

We track the major global markets each week in NFTRH and in NFTRH 568 we noted the following using a weekly chart of the Toronto Composite index.

Canada’s TSX looks like it would get mighty bullish if it completes this breakout.

Here’s the daily chart, breaking out and touching blue sky. Now we have a blue sky projection on the S&P 500 as well but also a bearish potential thereafter (due to its reverse symmetrical triangle). Maybe TSX is in line with that, or maybe markets are just going bullish one-by-one.

tsx

We can play all the ‘what if?’ guessing games we want but the fact is that this chart has broken to blue sky and it’s attempting to put in a 2nd week at that status. It’s bullish until proven otherwise.

tsx

But wait, there is a reverse symmetrical triangle, much like the one on SPX.

tsx

Personally, I wonder how you effectively manage bullish moves like a blue sky breakout with the potential to also be a bull trap reversal and the answer I keep coming up with is to stay balanced among a range of assets/markets (and cash), take enough profits, rotate as needed and manage risk until questions like “blue sky breakout or reverse sym-tri reversal pattern?” are satisfactorily answered or enough macro fundamental evidence mounts to build a strong case for one outcome or another.

I for one don’t have that kind of conviction just yet.

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