Keith Richards, president and chief portfolio manager, ValueTrend Wealth Management FOCUS: technical analysis
Top Picks: iShares 20 Year T-Bond ETF, Imperial Oil, Cash
MARKET OUTLOOK:
A technical look at the two major North American markets suggests a point of possible inflection. Here are my technical observations:
1. On the daily SPX (S&P 500 Index) chart, we see a move below the last low of 5,773. That is one strike against the market.
2. Next, we recently saw a test of the 200-day simple moving average near 5,730. It has not yet cracked – so we must assume the market is exhibiting a standard pullback. However, if we see a move below that indicator by more than three days, we must assume a trend break. Keep an eye on 5,730.
3. Momentum indicators like RSI (Relative Strength Index), MACD (moving average convergence/divergency), and MFI (Money Flow Index) have been diverging negatively for several months. This type of activity often acts as a leading indicator to bear markets.
4. The ValueTrend “Bear-o-meter” is a risk/reward indicator reported on our blog in the first week of each month. The indicator has correctly remained in the “risk” zone since Jan. 1, 2025. The March reading continues to warn of a higher-than-normal risk/reward trade-off on the markets.
The bottom line is the market is at an inflection point. At ValueTrend, we do not predict. We do prepare. In this case, if markets prove support at 5,730 and begin moving up from there, we may deploy some or all of our cash. However, if we see a material break of the 200-day moving average for more than a few days, our parameters will be met to increase cash from 20 per cent in our equity platform (since January) to a higher level.
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TOP PICKS:
ISHARES 20 YEAR T-BOND ETF (TLT NASD)
Twenty-year U.S. treasury bond ETF. North American recession and interest rate environment should be favourable –also, it is a non-correlated asset to stocks.
IMPERIAL OIL (IMO TSX)
Imperial oil. Sector can be bullish March to June. Also, many of the oil stocks are near their support points, including IMO. Good buying points.
CASH
We hold 20 per cent cash (since early January). At this point, the market is at an inflection point, aka approaching an opportune time to buy, or a sell signal.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| TLT NASD | Y | N | Y |
| IMO TSX | Y | N | Y |
| CASH | N/A | N/A | N/A |
PAST PICKS: November 25, 2024
Arc resources (ARX TSX)
- Then: $26.72
- Now: $26.35
- Return: -1%
- Total Return: -1%
Global X Silver miners ETF (SIL NYSEARCA)
- Then: US$34.92
- Now: US$38.42
- Return: 10%
- Total Return: 12%
Berkshire Hathaway (BRK.B NYSE)
- Then: US$477.43
- Now: US$491.79
- Return: 3%
- Total Return: 3%
Total Return Average: 5%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ARX TSX | Y | N | Y |
| SIL NYSEARCA | Y | N | Y |
| BRK.B NYSE | Y | N | Y |
