1/ Canadian Dollar
2/ Telecommunications, Silently Winning
3/ S&P 500 Equal Weight Technology
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1/
Canadian Dollar
The USDCAD pair resolved to the downside following 3-months of consolidation just below all-time highs. The next level of well-tested support is ~1.38. Bullish momentum continues to wane as technical indicators such as the daily MACD and PMO are now below their respective zero-lines. Indicative of further downside momentum.
Past performance is not indicative of future results
The 3-year Z-score (an indicator that measures how far away price is from a long-term average) is normalizing but coming off historically high levels. This suggests the pair may be overextended and ripe for a reversal or further consolidation.
2/
Telecommunications, Silently Winning
Telecommunications stocks have been silently winning for months now. The Telecom industry has outperformed the broad market by nearly 15% over the last 6-months. The below chart displays the ratio of Russell 1000 Telecom stocks versus the market. The ratio is trading above an upward sloping 200-day average. Additionally, the slope of the 200-day average is the most positive since 2016, indicative of strong forward price momentum.
Past performance is not indicative of future results
The industry’s performance is driven by ongoing demand for essential services such as wireless, broadband, and 5G. The majors (AT&T, Verizon, and T-Mobile) have reported solid earnings, with growth in their customer bases and consistent revenue from core services. Many have also seen positive results from their wireless and broadband segments, further contributing to the industry’s recent strength.
3/
S&P 500 Equal Weight Technology
The price ratio of S&P 500 Equal Weight Technology to S&P 500 Equal Weight provides insight into the relative performance of the technology sector compared to the broad market. A rising ratio indicates that tech stocks are outperforming, while a declining ratio indicates tech stocks are underperforming.
Past performance is not indicative of future results
Despite spending the majority of 2H 2024 below the 200-day average, the ratio recently broke out to new 6-month highs. If investors were fearful or pessimistic on stocks, they would not bid up high growth technology names! In other words, the recent move signals an increase in risk appetite – something very common in a bull market.
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Originally posted 20th February 2025
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