The TSX and ASX paint slightly different pictures in Canada and Australia, respectively.
Despite a down month in December, broadly speaking major Canadian equities had a fairly strong end to 2024, but in Australia stocks painted a less rosy picture over the last quarter of the year.
First, let's look specifically at Canada. While the S&P/TSX Composite Index closed December down for the month (-3.59%), it still finished up for the quarter (+3.03%) and for the year (+17.99%). So, no surprise, when you zoom into the more narrow blue chip S&P/TSX 60 Index you see similar performance, closing December down for the month (-3.67%), but up for the quarter (+3.02%) and for the year (+17.19%).
Now, in Australia the last quarter of the year was a bit more difficult for major equity markets. The All Ordinaries Index had a bit of an up and down year from a monthly POV, finally closing December down on a monthly basis (-3.20%) and a quarterly basis (-1.38%), but on a positive note it maintained a reasonably good close for the year (+7.55%). And of course the ASX 200 Index displayed similar behavior. Despite having a fairly strong year, including making a new high in December, it closed down for the month (-3.28%) and the quarter (-1.34%), but stayed in the green for 2024 (+7.49%).
Looking at the monthly price charts is a preferred way to step away from the noise and visualize the big picture performance over a longer period of time. Similar to what you could see in our earlier summary of the Asian stock markets, European stock markets and the US stock markets, there's a bounce in both Canadian and Australian equities over the past couple of years following a relative dip in late 2022. The Socrates Energy Model paints the shift in momentum quite clearly, with a spike above its moving average towards the later part of 2024 (Canada in particular). When looking the unique Socrates yellow stochastic line, you can see similar behavior in all four indices: crossing the traditional red (slow) and blue (fast) stochastic lines in the move up for 2023, the pause, and then the continued move back up through 2024.
When studying price charts in the Socrates Platform, pay close attention to the trend lines and oscillators - the Stochastic and Energy Model in particular. When the Energy Model spikes well above its moving average, it indicates a higher risk of losing momentum, which could mean a change in direction may be ahead. In addition, the Socrates Platform includes a unique third stochastic line (yellow) and when it crosses both red (slow) and blue (fast) stochastic lines it can be a helpful indicator, especially if you see alignment with a notable change in the Energy Model.
More generally, the most common approach to studying stochastic indicators is to follow the numerical values: when >80 a market is considered in possible "overbought" condition; when <20 a market is considered in possible "oversold" conditions. Many also look for line crossovers to signal potential alignment of momentum and trend (red crossovers), along with price direction changes (blue crossovers). Keep in mind, the blue (fast) stochastic line is more sensitive to recent price changes, and this can be amplified if you are looking at daily price movement (vs Weekly or Monthly price movement).
Researching markets across different time levels offers a much better view of short-term vs long-term activity. Many follow financial markets on a daily basis, which can certainly be helpful - especially at times of potential market entry or exit - but it's important to keep in mind daily price movement (and indicators based on daily price movement) is most vulnerable to spikes in volatility with reactionary or false price moves. The monthly (and quarterly) time level tends to even out the noise a bit by contrast, providing a cleaner view of actual market trends over the long-term.
Regardless of time level, a change in direction can just be a (relatively) short-term move or brief market correction, it does not necessarily mean it is a true change in the longer term trend. This is why studying market behavior consistently over a period of time, and across multiple time levels (daily, weekly, monthly, etc) is helpful.
Also, while intra-day price movement is worth studying, the Socrates Platform proprietary computer models more heavily weight closing price for each time level as it's a stronger signal of sentiment for that trading period (that day, that week, etc).
Log in to research these and other global financial markets. Go beyond the charts with the Global Market Watch pattern recognition (monthly, quarterly and yearly in particular) along with the Indicating Ranges on a weekly and monthly closing basis. See how - or if - price movement aligns with what different technical indicators and models are picking up on across various time levels (weekly, monthly, etc). This can help shed light on what might be ahead on both a short and long term basis.
Pro and Enterprise members can go deeper in their research with the Reversal System and Timing Arrays, as they look for potential turning points ahead. Keep an eye out for clusters of Reversal points as they represent areas of technical support (Bearish Reversals) and technical resistance (Bullish Reversals). Take note of any relatively large gaps in where Reversal points exist, as it may highlight where a market could see notable price movement before reaching support or resistance.
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