Financials May Weaken An Idea for US, Canada Markets

08/01/2017 2:55 am EST

Focus: STRATEGIES

Ziad Jasani

Managing Director and Partner, Independent Investor Institute

In US markets, Growth-based spaces underperform (Technology, Discretionaries), Financials drag on softer yields. In Canada,  Financials may weaken into the end of the week. Energy tries to continue its bounce, suggests Ziad Jasani, in his weekly video.


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Implications U.S.: S&P 500 (SPX) projects downwards to 2,435 (50-Day Average) with better odds of breaking below to end the week and starting a move towards 2,400.

Growth-based spaces underperform (Technology, Discretionaries), Financials pose a drag on softer yields, Materials/Mining and Energy can hold up at the front end of week on softer USD, but weaken to end the week. Defensives (including Bonds) favorable front end of the week but underperform mid-week onwards.

Tradeable Short-Term front half of the week ↑ US:

ProShares Short S&P500 ETF (SH)
ProShares Short Russell2000 ETF (RWM)
ProShares Short QQQ ETF (PSQ)
ProShares Short Dow30 (DOG)
iShares Barclays 20+ Year Treasury Bond (TLT)
SPDR Gold Trust Shares ETF (GLD)
iShares Silver Trust ETF (SLV)
Market Vectors Gold Miners ETF (GDX)

Implications (CANADA): TSX can bounce up off support 15,175-110, divergent to the S&P 500, if Oil holds above $49.50 to close July 28, 2017. Another test of its 200-Day Average is possible (15,326) but unlikely to be successful. Financials hold up the front end of the week with better chance to weaken into the end of the week. Energy attempts to continue bounce to start the week, but fails into the end of the week. Materials enjoy front of the week outperformance with Defensives, but weaken mid-week onwards.

Tradeable Short-Term front half of week ↑ (CDN):

iShares S&P TSX Capped Composite Index (XIC-T)
iShares S&P/TSX 60 Index ETF (XIU-T)
iShares S&P/TSX Capped Energy Index ETF (XEG-T)
iShares S&P/TSX Capped Financials Index ETF (XFN-T)
BMO S&P/TSX Equal Weight Banks Index ETF (ZEB-T)
iShares S&P/TSX Global Gold Index ETF (XGD-T)
iShares S&P/TSX Capped Materials Index ETF (XMA-T)
BMO Equal Weight Utilities Index ETF (ZUT-T)
iShares S&P/TSX Capped Consumer Staples Index ETF (XST-T)

video

View the Independent Investor Institute trading ideas and strategies video here

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