TSX Weekly Market Update: Breadth Shifts to Bearish
TSX market breadth recently shifted from Cautious to Bearish, with the Altra Market Score at 46.1, signaling a need for smaller position sizes.
The TSX has seen its market breadth shift from a Cautious stance to a more Bearish one this week, indicating a notable cooling in overall market momentum. This shift is reflected in the latest data, which shows an Altra Market score of 46.1, suggesting mixed signals across the index. The Altra Market score reflects the percentage of stocks showing bullish momentum across the entire index, providing a high-level read on overall market breadth. This current reading is down 1.1 points from last week, reinforcing the decelerating trend. The prevailing texture is described as "Mixed signals," with an explicit prompt to "Consider reducing position size."
Market Breadth Cools
Digging into the details of the TSX's breadth, we see a clear deceleration in underlying strength. Only 35.0% of stocks are currently trading above their 20-day Exponential Moving Average (EMA), and the same percentage are above their 50-day EMA. While a slightly better 53.33% remain above the longer-term 200-day EMA, the shorter-term trend indicators show a weakening picture. EMAs are widely used technical indicators that help smooth price data to identify trend direction. When a higher percentage of stocks are above their key EMAs, it generally indicates broader bullish participation. The current numbers suggest a contraction in this participation.
Further evidence of this cooling is seen in the daily advance/decline ratio, which stood at 45 advances against 15 declines, still favoring advances but with less conviction than a robust bull market. More significantly, the 15-day score trend for the Altra Market is down -5.2, highlighting a sustained period of weakening momentum. The Altra Score, for individual stocks, is a 0-100 momentum indicator derived from the alignment of EMAs and the trend of the Relative Strength Index (RSI) across daily, weekly, and monthly timeframes. A higher score signifies stronger bullish momentum, and the collective shift in these individual scores contributes to the market's overall breadth.
Sector Momentum Watch
At the sector level, the TSX paints a picture of divergence amidst the broader market's cautious turn. Out of six sectors, three are currently flagged as bullish, one as neutral, and two as bearish. The Altra Sector score provides a similar momentum reading at the sector level, not only giving a score for each but also ranking them by their relative strength against other sectors in the market.
Technology holds the top spot, ranked #1, up one position from last week. It is categorized as a Confirmed leader and is accelerating, suggesting strong internal momentum despite the broader market's cool-down. Energy follows closely at #2, also up one spot and maintaining its status as a Confirmed leader with accelerating momentum. These two sectors are currently driving much of the positive action in the TSX.
Conversely, Financials, though still a Confirmed leader, has slipped two spots to #3 and is now cooling off, indicating some profit-taking or a pause in its previous upward trajectory. Materials remains at #4, showing signs of losing relative strength and not yet confirmed as a strong leader. Utilities, ranked #5, is still lagging but has started to turn up, gaining one spot from last week, hinting at a potential bottoming process or renewed interest. Consumer Staples sits at the bottom, #6, falling one spot and showing further weakening momentum.
In summary, while the overall TSX market breadth suggests a shift towards bearish sentiment, led by a decrease in the Altra Market score, there are clear pockets of strength within Technology and Energy. Traders and investors may want to pay close attention to the leading sectors while exercising caution regarding overall position sizing in light of the market's mixed and decelerating signals.
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.