TSX Market Breadth Turns Bullish: Data Insights

The Canadian equities market, as measured by the Altra Market score, has recently shifted its overall texture from "Improving" to a more robust "Bullish" stance. This change is marked by an Altra Market score of 71.8, signaling a healthier environment for momentum-driven strategies. The Altra Market score reflects the percentage of stocks trading above key Exponential Moving Averages (EMAs) across the entire market, offering a concise read on overall market breadth. A higher score, like the current 71.8, indicates stronger underlying momentum.

Decoding the Breadth Data

Digging into the details, the breadth of the TSX market appears notably healthy. An impressive 71.67% of stocks are trading above their 20-day Exponential Moving Average (EMA), while 75.0% are above their 50-day EMA, and 66.67% maintain positions above their 200-day EMA. Exponential Moving Averages (EMAs) are technical indicators that smooth price data to identify trend direction. When a significant percentage of stocks are above these key averages, it suggests broad-based participation in upward price movements. This is further supported by the daily advances-to-declines ratio, with 38 stocks advancing against 22 declines, indicating positive market sentiment.

The momentum isn't just a snapshot; it shows a positive trend. Over the past 15 days, the Altra Market score has climbed by 7.8 points. This upward trajectory reinforces the idea of strengthening market participation and bullish conviction taking root across the TSX.

Sector Dynamics Underpinning the Shift

While the market-wide picture is positive, a closer look at sector-level momentum reveals a nuanced landscape. The Altra Sector score provides a momentum reading for individual sectors, alongside a relative strength rank against others in the same market. Currently, out of six sectors tracked, two are categorized as "Bullish," one as "Neutral," and three as "Bearish." This suggests that while overall breadth has improved, leading sectors are driving much of this momentum.

The sector rankings offer further clarity:

• Financials (#1): Holding steady at the top, the Financials sector is a "Confirmed leader." While still dominant, the data suggests it's currently "cooling off" slightly, which could imply consolidation after strong moves.
• Energy (#2): Also a "Confirmed leader," the Energy sector is notably "accelerating." This combination of leadership and increasing momentum makes it a key area to watch within the TSX.
• Utilities (#3): Moving up one spot from last week, Utilities are "gaining relative strength" but are "Not yet confirmed" as a leader. This signals a potential emerging trend worth monitoring.
• Consumer Staples (#4): This sector continues to "Lagging" and its "momentum weakening further," suggesting it's currently an area of relative underperformance.
• Materials (#5): Despite being "Still lagging," the Materials sector shows a glimmer of hope by "starting to turn up." This could mark the beginning of a potential shift in its momentum profile.
• Technology (#6): Dropping one rank, the Technology sector remains "Lagging" with its "momentum weakening further," making it another area of current underperformance.

The shift to a "Bullish" Altra Market score for the TSX, driven by healthy breadth and an improving 15-day trend, provides a supportive backdrop for momentum strategies. While sector-level analysis reveals a mixed bag, the strength and acceleration in key leading sectors like Energy, alongside a turnaround in Materials, suggest targeted opportunities for traders and investors alike.

What is the Altra Market score? The Altra Market score measures overall market breadth — the proportion of stocks in an index trading above key moving averages. A score above 60 signals broad market participation and a healthy momentum environment. Below 40 signals broad weakness. It is updated daily after market close.

Track these scores daily on AltraOne — momentum analytics for NSE, S&P 500, and TSX, updated every trading day after market close.

Altra Score is a momentum indicator reflecting EMA alignment and RSI trend across daily, weekly, and monthly timeframes. It is not investment advice. Past momentum does not guarantee future performance. Please consult a SEBI-registered advisor before making investment decisions.