It’s our old friend the JX/TSX (CDNX/TSX) ratio, which has been guiding the global macro (and our analysis) since it broke above its SMA 200 back in May. We then noted the Diamond consolidation and a coming breakout, which turned out to be up. Then it took out clear resistance as if it were a warm knife through butter.
The next objective for this positive macro reflation indicator is coming up. I’ve highlighted the two spots that define it as a resistance point. It’s relatively minor compared to the firm resistance above, but it should be considered for its potential to at least pause the macro if not stop it.
The big picture does ask us to consider whether this utterly bombed out ratio (along with the resources-based speculative trades in Canada) is a generational buying opportunity or a false dawn along an ongoing and brutal bear market. If inflation crops up for real it could be the former, but if deflation carries the day as it has globally for years, well, it would be the latter.