As we approach the end of the month, it appears that a particularly volatile period of equity and commodities may be ending and the summer doldrums may be setting in. U.S. equity markets, which had attempted to rebound in recent weeks, appear to have stalled short of significant resistance levels such as 11,700 for the Dow Industrials (US30 CFD) and 1,300 for the S&P 500 (SPX500 CFD). With upward momentum for U.S. equities fading, it appears that U.S. indices could retest their recent lows in coming sessions near 10,825 for the Dow and 1,200 for the S&P.

Commodity prices, meanwhile, also appear to be stabilizing following recent declines. Crude oil and natural gas, for example, appear to be holding above key support levels near $122/bbl and $9/mmbtu, respectively. Grains also appear to be attracting some investor support, with corn and wheat climbing back above $6/bushel and $8/bushel, respectively, and soybeans trading just below $14/bushel. Gold and silver, meanwhile, appear to be holding their own near the higher end of their old trading ranges trading around $935/oz and $17.35/oz, respectively.

Renewed support for commodities appears to be giving the resource-weighted Canadian indices a boost. Both the S&P/TSX Composite and the S&P/TSX 60 (Toronto60 CFD) indices appear to have completed double bottom patterns near 13,150 and 785, respectively. Initial possible resistance levels appear near 13,750 and then 14,000 for the Composite and 825 and then 855 for the 60.

Canadian share update: Resource producers rebound, resource customers slide

Resource producers across a number of sectors have been climbing today, suggesting that with commodities stabilizing, selling pressure against the energy and materials sectors may be starting to ease.

For example, some of the leading advancers in Canada today include energy producers Addax (TSX: T.AXC, Stock Forum) up 6.1%, Nexen (TSX: T.NXY, Stock Forum) up 4.0%, and Petro-Canada (TSX: T.PCA, Stock Forum) up 2.7%. In base metals, Equinox (TSX: T.EQN, Stock Forum) has moved up 5.3%, Teck Cominco (TSX: T.TCK.B, Stock Forum) has gained 1.9%, and steel distributor Russel Metals (TSX: T.RUS, Stock Forum) has climbed 2.8%. In the uranium group, Uranium One (TSX: T.UUU, Stock Forum) is up 4.9% while Cameco (TSX: T.CCO, Stock Forum) has advanced 2.5%. Also note that coal producer Fording (TSX: T.FDG.UN, Stock Forum) has overcome resistance at the $85 and could return to its previous $88.50 to $95 trading range. 

Stabilization in commodity prices may be raising concerns among some investors that although commodity prices have corrected, they may consolidate at historically high levels. This may be highlighted by significant price declines in companies that have significant exposure to resource prices in their input costs such as airlines. For example, Transat (TSX: T.TRZ.A, Stock Forum) has declined 2.9% today, while WestJet (TSX: T.WJA, Stock Forum) has fallen 1.1%  

Upcoming educational webinars

In the coming months, Colin Cieszynski will be presenting a series of free webinars on trading for accredited investors from coast to coast. 

Date                Time                Topic                                      

August 12         7:30 pm ET      Developing a Trading Strategy 3: Developing
                                                a Trading Plan (for CMC Markets clients only)

For more information on these and additional CMC Markets seminars, please go to CMC Markets Seminar Registration Page at http://www.cmcmarkets.ca/en/content/education/free_seminars.do

This commentary is based upon technical analysis. Technical analysis is the study of price and volume and the interpretation of trading patterns associated with such studies in an attempt to project future price movements. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision. 

This commentary is provided for informational and educational purposes only. Nothing contained in this commentary is intended as investment advice or a recommendation or solicitation to buy or sell. All opinions expressed are current as of the date of publication and subject to change without notice.

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