Javed Mirza, Technical Strategist, Raymond James
Focus: Technical analysis
Top picks: Toromont Industries, Stella-Jones, Nutrien
MARKET OUTLOOK:
Six technical positives strongly suggest a new four-year cycle (a three to five cyclical equity bull market) is attempting to take hold.
A new four-year cycle supports adding exposure to leadership within the more cyclically oriented areas of the market and should have upside, by time, into the second half of 2027 and the first half of 2028.
The six positives include, VIX scoring lower lows, rotation into the more cyclically oriented sectors, an average magnitude of a four-year reset was hit, cyclical commodities (namely copper and silver accelerating, global equity markets strengthening and sentiment is improving from bearish extremes.
North American equity markets, strengthening on the back of recent weekly mechanical buy, signals that should support upside, by time, into August. The Dow Jones Industrials Average is likely to join the other major North American equity indices in reaching new all-time price highs. Despite this bullish momentum, a near-term headwind is on the horizon as historically weak seasonality is looming in August to September and investor sentiment is starting to tilt too far towards the bullish side of the boat. In our view, pending seasonal weakness in August–September should offer an attractive longer-term entry point into this new four-year Cycle.
We are monitoring strengthening technicals on the U.S. 10-year treasury yield and the U.S. dollar. Sustained strength in either is likely to be a headwind and could short-circuit the summer rally. Smart money positioning currently supports a U.S. Dollar rally and corrections in the Canadian Dollar, Euro, and Japanese Yen.
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TOP PICKS:
Toromont Industries (TIH TSX)
Stella-Jones (SJ TSX)
Nutrien (NTR TSX)
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| TIH TSX | N | N | N |
| SJ TSX | N | N | N |
| NTR TSX | N | N | N |
PAST PICKS: JULY 12, 2024
Metro (MRU TSX)
Then: $79.25
Now: $106.30
Return: 34%
Total Return: 36%
Hydro One (H TSX)
Then: $40.30
Now: $49.24
Return: 22%
Total Return: 25%
Choice Properties REIT (CHP-UN TSX)
Then: $13.57
Now: $14.71
Return: 8%Total Return: 14%
Total Return Average: 25%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| MRU TSX | N | N | N |
| H TSX | N | N | N |
| CHP-UN TSX | N | N | N |
