Canada's main stock market, the Toronto Stock Exchange, closed out a marathon month for equities with only single digit gains on this Friday, as investors in it seemed to run into another psychological wall around mid-morning that prompted them to resume selling. And from there to the closing bells the TSX lost more than 240 points, 80 points alone over the final hour.
Amid concerns around high inflation and fears of a recession -- not just across North America, but globally too -- the TSX fell more than 5% for the month of September, and was down more than 2% for the quarter and more than 13% year to date, BNN TV noted.
Perhaps in reflecting overall investor confusion and uncertainty, Bill Strazzullo, Chief Market Strategist at Bell Curve Trading, said in an interview on BNN TV on Friday afternoon, his group is "aggressive" in being short the commodities market, the TSX, the S&P, the Nasdaq and the Dow. "So we are trying to make money both ways," he said, before adding: "We just think there is more to go on the downside."
In using a weather-related analogy relevant to these days -- with storms hitting Canada last week and the U.S. in recent days -- Strazzullo said "this is a Category 4 or 5 Bear Market" that "shows no signs of easing up".
When asked about his outlook for the TSX specifically, Strazzullo said he sees it testing the mid-range of the March 2020 rally, noting the TSX is for the most part no different to the US indices. He did note the TSX bottomed in March 2020 and then had a "significant" move higher of close to 100%. But since then it had given up less gains than its US counterparts -- having underperformed them. "The TSX has actually outperformed on the downside...but I still think there is more to go."
Strazzullo said crude oil sitting in the US$80 to $82 area is a "major red flag" and he sees crude oil falling to between US$70 and $72 a barrel, with "even an outside chance we could get that market in to the mid-50s". Right now his group is short, seeing US$70-$72, but he said the sell off from mid June suggests the market could go "as deep" as to the mid-$50s.
He awaits the next move by OPEC+ but said "trends in motion tend to stay in motion" and added "the path of least resistance in crude oil is still lower."
Of commodities today, gold closed with a gain on Friday, supported by falling bond yields and an easing dollar. Gold for December delivery closed up $3.40 to US$1,672.00 per ounce.
But West Texas Intermediate crude oil closed back below $80 despite expectations OPEC+ will move to cut members quotas when it meets next week, while concerns interest-rate hikes will lead to a demand-destroying recession continue. WTI crude for November delivery closed down $1.74 to US$79.49 per barrel, Marketwatch reported. November Brent crude, the global benchmark, was last seen down $0.49 to US$88.00, while Western Canada Select was down $1.35 to US$57.91 per barrel.