The TSX Composite is down roughly 6.75% year to date, with stocks getting hit hard since their July 13, 2018, high. Only one sector is positive over that time period, but I think its recent action gives us a really good perspective on the type of market environment we're in.

For some additional context around performance, below is a table with some metrics of the major sectors and indexes year to date, since the TSX Composite topped on July 13, 2018, and about 52-week highs and lows.

Table showing the performance of sector indexes within the TSX Composite

Below is a daily chart of the TSX Capped Healthcare Index, which was the last sector with prices above a rising 200-day moving average and momentum in a bullish range. Well, until recently that is.

Chart showing the performance of the TSX Capped Healthcare Index

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In mid-October, the sector fell roughly 36% from high to low in 11 trading days, causing the 200-day moving average to flatten out and momentum to get oversold.

Is this an actionable setup right now? No. My point here is that, if the sector showing the most relative strength is experiencing a massive drawdown and is joining the rest of the sectors in oversold territory, we're probably not in an environment where we want to be buying stocks.

Until we start to see new leadership emerge, the weight of the evidence continues to suggest that a neutral/bearish approach in Canada remains best.

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