The Resilience of the TSX: A New Bull Market Signal?

The S&P/TSX Composite Index has defied volatility in late 2025, closing at a record high of 28,339.88 on August 26, 2025, with a 0.60% daily gain [3]. This resilience, coupled with robust technical indicators and mixed sentiment data, raises a critical question: Is the TSX entering a new bull market phase?

Technical Indicators: A Strong Foundation

The index’s technical profile suggests a bullish trend. The 5-Day moving average (28,375.31) and 20-Day moving average (27,971.67) both show gains of 0.59% and 4.55%, respectively, while the 100-Day moving average has surged 24.67% year-to-date [1]. These multi-timeframe confirmations indicate a sustained upward momentum. However, the 14-Day RSI at 95.70% signals overbought conditions, a potential warning of near-term corrections [1]. The MACD, though not explicitly quantified, appears to align with the positive momentum of moving averages, reinforcing the case for a continuation of the uptrend [1].

Sentiment Analysis: Caution Amid Optimism

Investor sentiment remains a mixed signal. The AAII Investor Sentiment Survey reported bearish sentiment at 39.4% as of August 27, 2025, with bullish sentiment at 34.6%—a narrow gap that reflects cautious optimism [1]. This contrasts with analyst forecasts, where a Reuters poll predicts a 2.3% year-end rise in the TSX, driven by anticipated U.S. trade clarity and lower borrowing costs [2]. Energy and materials sectors are highlighted as key growth drivers, though consumer-facing industries face headwinds from rising AI-related costs [2].

The market’s vulnerability, however, was exposed on August 1, when the index fell 0.9% amid U.S. jobs data concerns and trade war escalations [4]. While futures on August 29 showed a 0.21% decline ahead of inflation data, the index’s ability to rebound to record highs suggests resilience [2].

Is a New Bull Market Emerging?

The TSX’s technical strength and sectoral momentum argue for a bullish case, but overbought RSI levels and lingering geopolitical risks temper enthusiasm. Historically, bull markets are characterized by sustained participation across sectors and investor confidence. While energy and materials are thriving, consumer sectors remain fragile. The key will be whether the index can maintain its upward trajectory without a significant pullback to test the 27,000 level, a critical support zone identified in recent volatility [4].

For now, the TSX appears to be in a consolidation phase, with technical indicators favoring a continuation of the uptrend. However, investors should remain vigilant for signs of a correction, particularly if the RSI fails to retreat from overbought territory.

Conclusion

The S&P/TSX Composite Index’s record close and strong moving averages signal a resilient market, but the path forward is not without risks. A new bull market may be emerging, but it will require broader sector participation and a resolution of external pressures—such as U.S. trade tensions—to solidify its foundation. For now, the technical case is compelling, but sentiment remains a wildcard.

**Source:[1] S&P/TSX Composite Index Technical Analysis, [https://www.barchart.com/stocks/quotes/%24TXCX/technical-analysis][2] Canada's TSX stock index predicted to rise 2.3% by year-end on trade certainty hopes: Reuters poll, [https://www.reuters.com/world/americas/canadas-tsx-stock-index-predicted-rise-23-by-year-end-trade-certainty-hopes-2025-08-19/][3] S&P/TSX Composite Index Ends 0.60% Higher at 28339.88, Record Close — Data Talk, [https://www.morningstar.com/news/dow-jones/202508268306/sptsx-composite-index-ends-060-higher-at-2833988-record-close-data-talk][4] TSX posts biggest decline since April as US jobs data spooks investors, [https://www.reuters.com/markets/europe/tsx-posts-biggest-decline-since-april-us-jobs-data-spooks-investors-2025-08-01/]