Creating a shopping list

April 3, 20139 Comments

There are a few near termed signs suggesting that we may indeed see a typical spring peak, followed by an early summer selloff. On the daily S&P500 chart, note the squeezing of the Bollinger Bands (often denotes a near termed change pending), the divergence in RSI and MACD momentum, and the very, very narrow volume in the recent weeks. Adding to the contrian sentiment signals discussed in Monday’s blog, sentimentrated.com just posted a chart noting the ratio of equity: money market mutual funds. The current ratio is approaching similar levels to 1999 and 2007. These are all potential signs of a shift in direction coming.

 

One reader of this blog asked me this week what sectors might appear most attractive, if my call for a correction comes true. At this juncture, I would suggest that we form a shopping list for a POST correction purchase, rather than go looking for new positions to add right now. On my shopping list would be the utilities sector, as mentioned on last week’s blog: https://www.valuetrend.ca/?p=2002

I’m also watching the rails. I sold my CNR position last week, given its early signs of weakness after an overbought condition. But a healthy pullback to its 200 day MA (green line)  and trendline in the mid-low $90’s would provide an entry point for this up trending stock. CP rail remains overbought, and I would expect that a correction to near its 200 day MA area.  The $105-$110 area might make it attractive. They are on my shopping list.

A few oversold technology stocks might be worth putting on your watch list as well. INTC has bounced off of $18-20 several times over the past 4 years. Near termed resistance lies around $22-24, which would be a good trade if one could catch the full range of that movement.

AAPL continues to intrigue me. Support does seem to come in near $420. Is this stock as undervalued as the APPL bulls think? Watch the earnings reports for signs of stability, and watch the charts for continued support over $420. This one might be worthy of a bottom fishing exercise, should it break the trendline to the upside.

I also continue to watch the Canadian Banks (which I sold recently – per past blogs). While perhaps a bit early yet, it will be interesting to see if this sector can again provide an equally profitable entry point as they did last year. A break of $18.50 on the BMO Bank ETF would imply a $17.50 target – and perhaps a good entry point.

Important reminders

Belleville Ontario Library book talk: I’m speaking in Bellville at their public library as part of my book promotion tour. Come out and join the discussion if you can – its this Thursday at 6:00 PM.

BNN MarketCall: Tune in to BNN this Friday at 6:00 PM. You can email questions now at [email protected] or call in during the 1-hour show at 1 855 326 6266

Vancouver Moneyshow: I’ll be at the Moneyshow on Friday April 19th at 12:15 PM speaking about the technical profile of the stock markets. Its at the Conference Center.

West Vancouver Library book talk: I’m speaking at the West Vancouver library as part of my book promotion tour. Come out and join the discussion on Saturday April 20th at 10:00 PM.

9 Comments

  • ON GOLD AS “MAY BE” INVESTMENT.

    KEITH,

    YOU WERE RIGHT ON THE US DOLLAR GOING TO 83 ON THE INDEX (IT WENT TO 83.52). INTERMEDIATE TREND IS UP AND THE CURRENCY REMAINS ABOVE ITS 20,50 AND 200 DAY MOVING AVERAGES. SHORT TERM MOMENTUM INDICATORS ARE OVERBOUGHT AND SHOWING SIGNS OF ROLLING OVER. NOW, GOLD IS AT $1569.00 US. RESISTANCE IS AT $1619.00US AND SUPPORT AT $1554.00 US. STRENGTH RELATIVE TO S&P500 IS NEGATIVE, BUT SHOWS EARLY SIGNS OF CHANGE. I AM STILL WAITING FOR SHORT TERM INDICATORS TO SHIFT FROM NEUTRAL TO POSITIVE TO GET IN AND US DOLLAR TO KEEP ON ROLLING OVER TO THE DOWNSIDE. DO YOU AGREE?

    Reply
    • I have noted that gold has support at $1550-ish for a while. It may just hit that level. Will the US dollar pull back now that its overbought? Probably–but its to be seen whether thats a s/t pullback before it breaks its 83-84 area to the upside, or if its the end of that rally. Too early to call.
      I do think that gold will start to perform later in the summer as markets shift a bit of focus off of equities. We’ll see.

      Reply
  • The North Korea thing spooked the markets that one day but that seems to have passed now

    Reply
  • I have placed entry positions in HDGD and HXD and am looking for an entry into HSD.

    Your Anti-spam word for me was TOAST. Hope it’s not literal!

    Reply
  • Keith,

    Was wondering what you thought about QCOR, trades on the Nasdaq. It’s a pharma, basically one drug, for now, it’s been hitting it out of the park for the last 8 quarters has 0 debt on the balance sheet. Which direction do you think it goes from here.
    Thanks.

    Reply
    • Hi John–I cant answer individual stock qustions on my blog–too time consuming to write about everyones individual stock questions–but phone this one in on May 3rd (my next MarketCall Tonight appearance)!

      Reply
  • Keith
    I always enjoy your appearances on BNN Market Call and on friday you stated something that I wish you to expand on. You said that you felt the commodity bull market had peaked and was now in decline.What I have gleaned from you is that we are seeing an end to the cyclical bull within the long term secular bear market and perhaps a new secular bull after this next correction.I wonder how we can have any sustained bull market without commodities doing well ie developing countries consuming food,energy and materials. Developed countries are aging and deep in debt.If not commodities then what sectors do we shop for after this pullback?Or does the market just keep going sideways longer? I appreciate your thoughts

    Reply
    • Hi Doug
      I cant recall which blog entry I posted my original long term cyle commodity chart, but I will re do it on my next entry.
      Will stocks advance if commodities decline (long trend)?–the answer is, yes, stocks can still advance in a declining commodity environment. The last peak in this cycle war about 1984–and stocks began their greatest advance in history right around then. Commodity basked fell for over a decade, whicle stocks advanced aggressively.
      I’ll post the old chart soon.

      Reply

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