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The Toronto-Dominion Bank - (TD.TO) - May 29, 2024

Relative strength analysis not only helps investors to determine outperformers and underperformers relative to broad markets and asset classes, but also within more concentrated groups such as industry sectors.

With Canadian banks reporting results this week, we are reminded that the banks are not a monolithic group and even if they may have similar broad trends, there can be significant differences in performance between them.

TD Bank (TD.TO) led things off last week with strong results for example, but with the bank facing regulatory scrutiny and investigations in the US, it’s shares have not done much, and have been underperforming their peers for some time.

TD Bank is currently the lowest ranked of the Big Six banks in the SIA S&P/TSX 60 Index Report. In 52nd place, down 5 spots in the last month, TD.TO is in the lower half of the Red Unfavored Zone where it has been since March of 2023. TD Bank has been out of the green zone since April of 2022.

TD Bank also is the worst recent performer of the group, having dropped 6.7% in the last month. In comparison, National Bank is the highest ranked, sitting in 14th place in the Green Favored Zone, while Royal Bank and Bank of Montreal have been the strongest performers over the last month with gains of 6.8% and 5.5% respectively.

Candlestick Chart Starts to Break Down. For the last two years, TD Bank (TD.TO) shares have been stuck in a sideways trading range between $72.50 and $87.50 where they have been consolidating since a big uptrend came to an end. In recent weeks, signs of distribution have started to emerge with a short-term downtrend of lower highs emerging, a short-term uptrend of higher lows starting to break, and the shares unable to get enough of a boost from earnings to retake their 10-week average.

Initial downside channel support appears near $72.50, a close below there would signal the start of a new downtrend. Should that occur, next potential support may appear in the $58.00 to $60.00 zone, where previous support and a measured move converge. Initial resistance appears at the 10-week average near $78.30.

Point and Figure Falls Under Distribution. Toward the end of last year, TD Bank (TD.TO) broke out of a downtrend that had started back in early 2022. By January, however, the breakout had failed with the shares peaking at another lower high. Since then distribution has resumed with a new downtrend starting and the shares completing a bearish Triple Bottom breakdown. The shares didn’t get much of a boost from earnings either, only enough for a 3-box bounce on a 1% chart.

Initial upside resistance appears at recent column highs near $81.75 then $83.35. Downside support tests appear at previous lows near $74.00, then $71.80, followed by $69.70 which is based on a horizontal count.

With a fully bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 0 out of 10, TD.TO is exhibiting short-term weakness across the asset classes.

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