The JX (CDNX)/TSX ratio is breaking down below the SMA 50. Recall that in May when it took out the SMA 200 and again in June when it broke the Diamond pattern upward we got big bullish signals on the reflating macro. With the bounces in USD and the Gold/Silver ratio it is no surprise that this ratio is breaking down to a degree, but… right now it’s a normal thing to be happening in a minor market liquidity event.
If the event is to remain minor (with USD and Gold/Silver ratio only bouncing) JX/TSX should find support at one of the areas noted on the weekly chart.
Several areas of the reflation trades are weakening as expected if USD and Gold/Silver ratio were to rally. JX/TSX is right there among them now and this begs caution short-term to the inflation/reflation trades that sprung out of the March-April disaster.
As a side note, markets are rotating back to the remote tools like DOCU, ZM, ZS, DDOG, etc. to varying degrees. The reflation trades remain vulnerable near-term. None of this is a surprise, but it bears repeating.
