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Stock photo of a car engine overheating
Stock photo of a car engine overheating
(Robert Cocquyt/Photos.com)

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In broad rally, most sectors of TSX overheating

Virtually every sector of the Canadian equity market is dangerously extended. While conditions can change very quickly, technical indicators suggest a low probability of success for most traders and short term investors.

Professional traders depend heavily on technical analysis precisely because market conditions change rapidly. Sectors and stocks that are hugely oversold and poised for a rebound can move to a dramatically overbought danger zone in a matter of days, though the opposite is also true – the technical environment described here could be completely outdated by Thursday. Investors with a longer time horizon generally don’t have to bother with the technicals; the exceptions are cases where longer term investors are looking to add a new positions or sell an existing investment.