Keith Richards, President and Chief Portfolio Manager, ValueTrend Wealth Management
Focus: Technical analysis
Top picks: ARC Resources, Global X Silver Miners ETF, Global X High Interest Savings ETF
MARKET OUTLOOK:
The rise in stocks since the turnaround in April when tariffs were eased has been nothing short of spectacular. It’s also due to take a break. Observant viewers will be aware of the S&P 500 being unable to crack its high of 6147 for about half a year now. I think there will be more volatility to come.
It’s happening because of overbought stock markets, seasonality, Middle East conflicts, and tariffs. Now we need to watch out for investor-eating alligators.Stocks rising and bond yields rising are not compatible. Rising yields push bond prices lower. While bond and stock prices are not perfectly correlated, they normally keep a reasonably close pace. Currently we are seeing huge negative divergence.
Picture an alligator about to clamp its jaws down after opening wide. I call the divergence “Gator Jaws,” meaning that the price of stocks and price of bonds are moving in opposite directions. That will change by a falling stock market, or rising bond market (falling yields), or both – but it will change.
My solution is commodities, which I have been pounding the table on for two years here on BNN and via my blogs.
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TOP PICKS:
ARC Resources (ARX TSX)
We are commodity fans. We have owned this for some time. It is breaking out, so likely will move higher. There is a strong argument to own natural gas stocks in light of European Union market demand, potential for Canadian pipelines and new production to be opened by new Prime Minister Mark Carney after the Justin Trudeau era of capping and no-pipeline bills.
Global X Silver Miners ETF (SIL NYSEARCA)
It is another commodity. I recommended silver on my blog and YouTube channel over the past year as a catch-up trade to gold and gold stocks. Producers are our preferred way to hold precious metals.
Global X High Interest Savings ETF (CASH TSX)
I own high interest saving accounts (HISA). The account pays a monthly return and is liquid. We anticipate volatility in the coming months. Cash is risk abating and opportunistic.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ARX TSX | Y | N | Y |
| SIL NYSEARCA | Y | N | Y |
PAST PICKS: May 22, 2024
BMO India Equity Index ETF (ZID TSX)
Then: $49.66
Now: $50.20
Return: 1%
Total Return: 1%
Nutrien (NTR TSX)
Then: $81.66
Now: $82.03
Return: 0.45%
Total Return: 0.45%
Aecon (ARE TSX)
Then: $19.04
Now: $19.70
Return: 3%
Total Return: 4%
Total Return Average: 2%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ZID TSX | Y | N | Y |
| NTR TSX | Y | N | Y |
| ARE TSX | Y | N | Y |
