Canada : Moving forward? (EWC) – 23/06/17

We integrate the iShares MSCI Canada ETF  (EWC) into our Watchlist. This index is broad and well diversified, including 94 companies, and is composed of big companies mainly focused on the financial sector (42% of capitalisation), energy (23%) and mines (11%), the remaining 24% for all other industrial sectors and services.

• The index's long-term technical configuration is rather attractive (monthly charts). The 2016 correction was wiped out, and despite the recent drop in crude prices, the index was very resilient, particularly thanks to the banks, with a strong bullish trend for the first capitalisation of the index, Royal Bank of Canada. Technically, the crossing of the moving averages (13x26exp) coupled with the crossing of the zero line by the MACD should be noted. All this calls for confirmation, but looks promising.

EWC, monthly data :

• The weekly graph is supported by the 100 weeks EMA which plays its support role.  The moving Averages remained  crossed in a positive way, but have flattened and converged at the same level. An upward momentum that would place prices above moving averages would allow for the validation of the short and long term configurations. On the other hand, a bearish break out  of  the 100 weeks EMA would send a very negative signal.

EWC, weekly data :