I think this is my first post looking at the $TSX (Toronto Stock Exchange) for this blog site. The TSX is largely driven by commodity markets as energy and materials make up almost forty percent of the index weighting. This commodity weighting is down substantially from the highs achieved in 2011 as commodity markets have been quite bearish. Financials and various other sectors have been the drivers for this current $TSX bull leg.
I have assigned the phasing for the TSX to be the same as the $SPX (ie. to give commonality). One can argue where to place the last 4.5 year Hurst cycle low, but I lean towards late 2012, although the June 2012 low is a better fit to the eye. The index is now making another 40 week Hurst low and it is running 33 weeks and counting. Today’s low hit 14908, which is a hair above the 40 week FLD (median). If I am wrong about the phasing for the last 4.5 year and 18 month lows, it could imply a much more significant rally out of the coming bottom. That is because the low due imminently might also be an 18 month low as well as a 40 week low. I expect a low to form in October and preferably early in the month.
Once this 40 week low forms, we should watch carefully how this market performs. If one looks at how this market topped out in the last several major tops (2000, 2008, and 2011) all these tops formed with an initial break of the 40 week FLD. In these top formations, once the 40 week low arrived, the markets either rallied to one more new high or simply retested the high before breaking down. We’ve arrived at a key point in time for this market and it should be telling for other global indices as well.
The 9 year cycle low for the $TSX is expected to arrive by late 2015 or into 2016. I would expect a contracted cycle for both the 4.5 and 9 year cycles when the $TSX makes its important long term low. I would look for a year end high here once the 40 week low forms, but thereafter risk rises substantially.