View from Toronto: Trade Ideas for US, TSX This Week

08/15/2017 3:03 am EST

Focus: STRATEGIES

Ziad Jasani

Managing Director and Partner, Independent Investor Institute

In U.S. markets, Materials/Mining and Energy face pressure from a rising USD mid-week onwards and weaken to end the week. In Canada, Materials (XMA-T) enjoy a weaker USD front end of the week but bearishly reverse mid-week onwards, says Ziad Jasani.


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US Equity Market Outlook & Summary– Week of August 14-18:  
For slide format use this link:

Implications (US): S&P 500 is tepidly holding at the support of 2,440-35, with better odds to hold above to start the week, but then reverse under mid-week-onwards – projecting down to 2,400. Growth-based spaces are likely to out-perform to start the week (Technology, Discretionaries, Industrials, Miners). Financials continue to face downside-pressure on yields being suppressed from August 11 CPI miss.

However, Materials/Mining and Energy are likely to face pressure from a rising USD mid-week onwards and weaken to end the week. Defensives (including Bonds, Inverse Plays) are not likely to deliver to start the week, but important as a hedge, and likely to out-perform to end the week.

Trade-able Short-Term Front ½ of Week ↑ (US):
iShares MSCI Emerging Markets ETF (EEM)
iShares MSCI EAFE Index Fund ETF (EFA)
SPDR Euro Stoxx 50 ETF (FEZ)

SPDR S&P Biotech ETF (XBI)
SPDR S&P Pharmaceuticals ETF (XPH)
SPDR S&P Metals & Mining (XME)
Consumer Discretionary Select Sector SPDR Fund (XLY)
Technology Select Sector SPDR Fund (XLK)  
iShares US Technology ETF (IYW)
Inverse Gold

Trade-able short-term back half of week ↑ (US):
ProShares Short S&P500 ETF (SH)
ProShares Short Russell 2000 ETF (RWM)

Canadian Market Outlook & Summary – Week of August 14-18:  
For slide format use this link:

Implications (Canada): TSX is tied to Oil which has “overheated.” All short-term technicals support a pull-back in Oil and the Commodity-Complex in general. However, to start the week, Oil is likely to continue hovering under $49.50.

While Oil hovers above $48.50 the TSX is likely to remain above support of 15,025-14,950 but watch out below if Oil breaks and sustains below $48.

The TSX is likely to face some downside pressure from Financials iShares S&P/TSX Capped Financials Index ETF (XFN-T) to start the week, but that is likely offset by Energy iShares S&P/TSX Capped Energy Index ETF (XEG-T) which implies a bounce off support at 15,025-14,950 at the front end of the week but Wednesday, August 16 onwards downside risk grows.

Materials iShares S&P/TSX Capped Materials Index ETF (XMA-T) enjoy a weaker USD front end of the week and rise, but bearishly reverse mid-week onwards. Defensives sectors shore up the front end of the week, but FOMC Meeting Minutes August 16 are likely to pressure them down to end the week.

Trade-able short-term front half of the week ↑ (CDN)
iShares S&P TSX Capped Composite Index (XIC-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)

Trade-able short-term back half of the week ↑ (CDN)
BetaPro S&P/TSX 60 Daily Inverse ETF (HIX-T).
BetaPro Crude Oil -2X Daily Bear ETF (HOD-T).

Weekly Video Market Strategy Session – August 14:

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