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TSX Composite Index versus the S&P 500 Index

Brooke Thackray recently completed a study showing that the TSX Composite Index tends to outperform the S&P 500 from near the end of February to near the middle of March. Following are the charts:

TSX versus S&P 500 in February 1985-2009

TSX versus S&P 500 in March 1985-2009

Seasonality in Equity Markets in the Month of March

The performance of equity markets during the month of March generally is better than average. The S&P 500 Index during the past 10 periods gained an average of 1.21%. March was the second best performing month in the year. The TSX Composite Index during the past 10 periods gained an average of 0.52%. March was the fifth best performing month in the year.

Other major U.S. equity indices also tended to move higher during the past 10 March periods. The Dow Jones Industrial Average moved higher in 6 periods for an average gain per period of 0.80%, the Russell 2000 Index rose in 7 periods for an average gain per period of 0.74% and the Dow Jones Transportation Average improved in 6 periods for an average gain per period of 2.59%. The NASDAQ Composite Index was a significant underperformer. It lost an average of 1.14% per period.

Best performing U.S. sectors in March during the past 10 periods were Consumer Discretionary (5 gains, 1.32% average), Industrials (8 gains, 1.86% average), Materials (6 gains, 1.65%) and Energy (6 gains, 1.83% average). Worst performing sector was Health Care (6 gains, 0.79% loss). Worst performing subsector was Amex Biotech with an average loss per period of 4.35%.

Best performing Canadian sector in March during the past 10 periods was Energy (7 gains, 3.56% average. Financial Services also outperformed (7 gains, 1.17% average). Worst performing sector was technology (4 gains, 2.96% average loss).

International equity indices also recorded gains in March during the past 10 periods. The Nikkei Average recorded 6 gains for an average of 0.88% per period, the London FT Index improved in 3 periods for an average of 0.37%, the Paris CAC Index rose in 6 periods for an average gain of 0.67% and the Australia All Ordinaries Composite Index gained in 6 periods for an average gain of 0.56%. Only the Frankfurt DAX Index was break even during the period.

Commodities were mixed during the month. Crude oil rose in five periods for an average gain of 1.84%. Copper was the star performer with 8 gains and an average gain per period of 5.76%. Lumber was virtually breakeven with only 3 gains and gold improved only 4 times for an average loss of 1.69% per period.

CAE

Tech Talk received a question about the seasonality in CAE following favourable comments on Boeing and Bombardier from early March to the middle of July period. Just confirming that CAE also has similar favourable seasonal characteristics during this period! Following is a chart based on the past 14 years showing its seasonality:

Chart courtesy of www.equityclock.com

Comments offered in this report are for information only. They should not be considered as advice to purchase or to sell mentioned securities. An attempt to provide accurate data has been made, but accuracy is not guaranteed.

Don Vialoux is a research analyst for JovInvestment Management Inc. All of the views expressed herein are the personal views of the author and are not necessarily the views of JovInvestment Management Inc., although any of the recommendations found herein may be reflected in positions or transactions in the various client portfolios managed by JovInvestment Management Inc

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