Recap: Week Ending November 27, 2015
For the most part, North American Equities finished the week on a lower note as major exchanges in the United States were closed for Thanksgiving. Last week saw the closure of exchanges on Thursday as well as an early close on Friday to mark the holiday in the United States. Action on markets as well as the events on the economic calendar was severely muted as a result of the holiday last week. With this being said, the S&P 500 led the way higher, closing up 0.05% last week to settle at 2090.11 on Friday. On the flip side, the Dow Jones Industrial Average finished the week down -0.14%, making it the weakest index in the United States. In Canada, the Toronto Stock Exchange Composite Index, or TSX was not closed because of Thanksgiving; however, the market did experience much lighter than regular volume as a result of the US vacation. With this being said, the TSX did trade lower by 0.49% last week to settle Friday at 13,368. The move lower in the TSX comes as the price of gold traded to multiyear lows, closing the week down $20 or 1.91% to settle at $1,056.10. The move lower last week in the precious metal is the sixth straight weekly loss, putting prices into levels that have not been seen since very early 2010. The move lower in the TSX last week can be attributed to the fall in the price of gold. On a daily timeframe, a correlation of roughly 60% is occurring between gold and the TSX. This means that as the price of gold continues to fall, the TSX is most likely to fall along with it. The action in gold was quite interesting as political tensions are rising between Russia and Turkey following the downing of a Russian fighter jet over Turkish airspace. Historically, such events would have caused a large spike in the price of the precious metal. However, it appears that gold may be losing what many consider to be the notion of a haven. With this being said, not all commodities had a bad week last week. For the second straight week, the price of NYMEX crude traded higher, closing the week up $0.031 or 0.75%. Crude is attempting to form a bottom after tumbling from a well-accepted value area of between the $45-$47 range. From a technical analysis standpoint, the bottom appears to be fairly well supported with no sudden turnarounds, signalling a shift from sellers to buyers. A fast, aggressive bottom could signal that a shift in direction may only be temporary. The RSI, which stands for Relative Strength Index, is reading 42 on the daily timeframe. Readings below 30 are considered oversold while readings above 70 are considered overbought. Recently it must be noted that the RSI of crude traded slightly above the 30 level before heading higher. With a reading of 42 on the RSI, the price of crude has much upside potential. It will be important to see if the trend to the upside will remain intact for the coming week, if so one, can be much more confident that a firm bottom is forming in the energy product.