I’m leaving tomorrow for Orlando, where I will be doing a seminar for the good folks at the Orlando Moneyshow this coming Saturday Fe 10th at 6:15pm.
Here is the link for the Orlando show — If you happen to travel to central Florida during the winter, or if you have family/friends who do the snowbird routine—let them know about the show. It’s taking place in the Omni Orlando Resort – here is the link to my presentation.
Hey…did anyone notice that the market has been falling lately?
Once in a while I get a short termed market prediction right, and I did get it right on the current correction – I posted this blog before market open last Monday January 29th.
I also posted a blog on the 31st noting a couple of downside targets for the S&P 500 here – those targets being 2700 or 2500 if that first level fails. Read the blog for the potential circumstances surrounding those targets.
Finally, I posted a blog on the TSX suggesting a mid-15,000 downside target. I have a bullish outlook for a trade on the index into the spring despite the neartermed bearish call. Here is that blog.
My comments on last night’s BNN appearance were that this correction has been a long time coming – and is a healthy, much needed break from the rampant foolishness that has dominated markets since the second quarter of 2017. If you read my Globe and Mail article for the show, you will note that I recommended viewers start to look for buying opportunities as markets test and bounce from one of my suggested support targets. And like I always say—you need cash to participate in market corrections, which is why I have been harboring cash for a while now. We’re around 17-18% cash in our equity platform.
We’ve made a list of stocks and sectors we like, and I thought I would highlight couple of them here.
As noted above, we like the TSX for a play on energy and materials (and to a lesser extent, the banks) into the spring. Buying a TSX index ETF might make sense when that market shows signs of support.
I still like energy as an individual play. Canadian producers are attractive – we are looking to add to positons. Below is the XEG chart – it depicts a nice symmetrical triangle. It appears that this index has some catching up to do with the price of WTI oil—a breakout through the upper band of the triangle would be exciting. Pick your stocks individually from this index rather than buying the ETF. There are many varieties of quality that make up the index—we’ve been selectively buying.
I also like the US banks. In fact, I began buying them late last year. Here is one blog on that subject.
The sector still appears attractive. A pullback closer to its neckline break has made it even more so.
Finally, the technology sector – which has been sooooooo overbought…is finally starting to show some potential undervalued candidates. Keep your eyes on AAPL for a reversal. The stock is toying with its 200 day SMA. If it momentarily breaks but then moves back above it, the trend can be considered intact. Its not the only tech stock we are looking at—dig though the group for stocks that are back to their trendlines. There’s money to be made in the right areas.
That’s all for now, folks. I’m off to Orlando. I’ll respond to your questions and comments later in the week.
Enjoy the opportunities as they come up—it’s been a while since we’ve had such a good time to be searching for value!
Congratulations on your market top call! I am happy to see it as it will provide good opportunities to deploy my overweight cash position. Good posts recently, please keep them coming.
I will be posting and even trading while in Florida–I will be remotely tapping into my office and my staff knows the drill.
I expect to do my usual 2 x blogs a week
Even KRE the regional bank broke a trendline today. Could get it for an even better price in the coming days
Market craziness… The XIV inverse VIX closed yesterday at $99, was halted this morning, opened around $10.50 and closed at $7.35!! Just a tiny example of how far off into la-la land the financial markets have strayed!!
Good morning Keith,
Thank you for your advice for the correction. I have started to collect cash about a week and half prior to the beginning of the correction. I am in a shopping mode with my 25% holding in cash.
Have a nice trip.
Leg in a bit at a time Paul–we cant say at what level the market begins its rebound–
-could be quick,
-could be a multimple number of corrections and rallies,
-could go down futhrer before a bottom.
I’m parcelling in slowly–not sure if today is going to be the start of moving in, but either way I am not spending the cash all at once
Enjoyed your show on BNN the other evening. I was particularly interested in various comments and recommendations you made about several TSX technology components: blackberry, shopify, and CGI group. In an early January blog you had recommended stock picking rather than purchasing the Canadian technology sector as represented by the XIT. However, the other evening you mentioned many positives about several important constituent parts of the index that you were formerly cautious about. I’m wondering whether you would now consider yourself more bullish on the entire Canadian technology sector? Thanks for your insights.
Yes Joe, more of the major stocks have shown bullish formations (albeit, they were somewhat reversed in the recent week…) – but I am still inclined to cherry pick. Having said that, if you are strapped for cash and cant buy 3-4 stocks, the index is now more attractive given that its major components are largely postive
best trade of the year was raising cash about 2 weeks ago
Is the long term trend for the US financials still holding up?
Indeed it is Dave–the ZUB ETF that I own was bought on the breakout through $28. The pullback maintains the breakout above that level and is looking to offer a buy point again
I love market corrections!
I really enjoy your analysis on BBN and through your business. I had called BNN and asked you about Mastercard and you stated it is in one of your portfolio’s. I did not get a chance to ask you about Visa. What do you think of Visa?
I did a chart analysis and Mastercards stock seems to grow faster than Visa’ stock over the last 5-8 years. Am I missing something? Why is MA growing faster than Visa. I thought Visa the bigger player and more cards given to consumers.
Insight much appreciated.
They are both great stocks but the MA outperformance is from the fact that – they, like Avis car rental used to say- try harder. MA has been growing at a faster pace and has tons of room to catch up. The dominant player VISA already owns the market. The guy in number two position has a better chance of eating into VISA’s share–and they have – with contracts at Costco, amongst other major retailers.
Thanks for the super analysis that led to me raising cash.
Thank you Keith.