Full episode: Market Call for Thursday, November 14, 2019
Hap Sneddon, chief portfolio manager and founder at CastleMoore
Focus: Technical analysis
There are a few markers that in the short-term suggest we're in a corrective phase. Technically, it’s the low put/call ratio and VIX readings. Seasonally, the mid-November historical pause. And fundamentally, a lack of fresh catalysts now that “phase 1” of the U.S.-China trade negotiations though unsigned has been discounted, being through 90 per cent of earnings with 75 per cent of companies reporting positive earnings per share surprises. Add it all up and the forecast is for a mild down move followed by a resumption of the bull market as we greet December.
During this period, CastleMoore is looking for a further rotation down in the deep towards longer-term pro-cyclical trades including base metals and energy, a more “at the money” continuation of strength in healthcare, financials and, to a lesser degree, technology, and an ultimate roll-over in sovereign bonds and the U.S. dollar.
PEMBINA PIPELINE (PPL:CT)
Last bought on Nov. 12, 2019 at $47.34.
Third-quarter results were in-line, future guidance was reaffirmed and capital spending was modestly raised. The company pays a 4 per cent dividend and is technically sound, with a good mid-term trend in effect. A near-term “buy” signal has recently been triggered.
OPEN TEXT (OTEX:CT)
Last bought on April 28, 2019 at $45.38.
The company reported a no-surprise in-line quarter on Oct. 31, then followed that with the acquisition of Carbonite for US$1.42billion this week. After a late July drop, the stock has recovered nicely and is technically positive against the S&P, the latter being the mother’s milk of investing. When the long-term technical trend is married with the company’s ability to execute and surprise, it makes for a good core holding for investors.
VERTEX PHARMACEUTICALS (VRTX:UW)
Last bought on March 26, 2019 at $189.19
Healthcare is in a secular bull market and should be owned by all investors. Vertex is one way to do so. This biotech company specializes in serious diseases such as cystic fibrosis and has a strong commercial and pipeline trajectory. Most importantly, the stock is technically strong. New highs beget new highs. If investors prefer a little less alpha (more security), our past pick IBB can be used instead.
PAST PICKS: JUNE 7, 2019
ISHARES GLOBAL GOLD ETF (XGD:CT)
- Then: $12.46
- Now: $15.06
- Return: 21%
- Total return: 21%
ISHARES NASDAQ BIOTECHNOLOGY ETF (IBB:UW)
- Then: $103.88
- Now: $109.41
- Return: 5%
- Total return: 6%
PREMIUM BRANDS (PBH:CT)
- Then: $86.50
- Now: $81.92
- Return: -5%
- Total return: -4%
Total return average: 8%