Full episode: Market Call for Tuesday, December 18, 2018
Hap Sneddon, chief portfolio manager and founder of Castlemoore Inc.
Focus: Technical analysis and macro portfolio strategy
It seems like the dire wolf is at the doorstep again and bigger than during the earlier part of the year. Technical damage has occurred but some significant positives cannot be overlooked including indexes holding above the February and April lows, the U.S. dollar rolling over painfully slow, copper holding in and yields with indicators at extremes. We have seen sentiment become exceptionally washed out, whether it is measured by CBOE put/call ratios, investor surveys or the Fear and Greed Index. Even if we can build on a bounce or not markets are due for a bullish move over the course of the next few months.
ELI LILLY AND CO (LLY.N)
In a down tape over the last few months Lilly has been making new highs. With the stock off over the last couple of weeks, still much less than the market, investors get a lower entry point into a premier healthcare stock. Today the company has its 2019 Guidance and Investment Community Meeting where I expect direction from the company to once again be conservative only to be followed by a beat. Healthcare is one of the few sectors in a secular bull market.
Emerging markets offer the best investor risk-to-reward on an index level. The primary drivers to a bullish upside are positive movements in the China-U.S. trade relations and concurrent weakness in the U.S. dollar. After falling to 2015-2016 levels, emerging markets do not only offer good value but also a conservative allocation in today’s environment with an initial one year upside of 25 per cent.
TECK RESOURCES LTD (TECKb.TO)
Of course an investment in Teck is about global growth and a resolution to trade friction, but it’s much more than just that. Teck continues to trade at a discounted 4.5 times enterprise value at the 2019 estimated cash flow (EV/2019E CF) despite its strong free cash flow (FCF) generation (plus $1.9B), stable financial outlook and improved growth outlook in the copper business. With copper prices holding in well, the upside initial target off of a one year and 10 year base is exceptional.
PAST PICKS: JAN. 3, 2018
ISHARES S&P/TSX GLOBAL BASE METALS INDEX ETF (XBM.TO)
- Then: $14.90
- Now: $11.28
- Return: -24%
- Total return: -23%
- Then: $135.15
- Now: $180.41
- Return: 33%
- Total return: 33%
JP MORGAN CHASE & CO (JPM.N)
- Then: $108.06
- Now: $100.64
- Return: -7%
- Total return: -5%
Total return average: 2%
Seasonal Advantage Portfolio
Performance as of Oct. 31, 2018
- 1 month: -3.11% fund, -4.58% index
- 3 month: -2.40% fund, -4.26% index
- 6 Month: 2.92% fund, -0.39% index
Index: Equal Weight of the S&P 500 Index, TSX Composite, and 10-Year U.S. Treasury Note
TOP 5 HOLDINGS AND WEIGHTINGS
Portfolio holdings and weightings as of October 31.
- BMO Dow Jones Industrial Average Hedged to CAD Index ETF: 30%
- VanEck Vectors Agribusiness ETF: 10%
- iShares NASDAQ 100 ETF(CAD-Hedged): 10%
- Cash: 8.5%
- iShares U.S Insurance ETF: 8%
COMPANY TWITTER: @CastleMoore
PERSONAL TWITTER: @Hap_Sneddon