Javed Mirza, technical strategist at Raymond James

FOCUS: Technical analysis

MARKET OUTLOOK:

New short-term “mechanical buy” signals in WTI Crude, Brent, Gold and U.S. 10-year yields are likely to put further near-term pressure on equities. A multi-day move below their 50-day moving averages by the S&P 500 Index and TSX Composite Index would be consistent with an intermediate-term equity market corrective phase taking hold. An intermediate-term correction would target major technical support near their 200-day moving averages.

Our longer-term technical work supports the longer-term path of least resistance remaining higher through the first half of 2025 as equity markets are in Phase 2 of the market cycle model. As a result, we view an intermediate-term equity market correction in 2024 as an opportunity to add exposure equities near key technical support levels.

The following five early technical negatives are in place, which suggest the potential for further near-term weakness in equity markets:

  • Equity markets weakening: The S&P 500, TSX Composite and Nasdaq 100 just triggered new daily “mechanical sell” signals confirming that short-term price momentum is negative.
  • Percentage of stocks with bullish patterns weakening: This indicates that underneath the surface more stocks on the S&P 500 are seeing their technical profiles deteriorate.
  • VIX strengthening: The Volatility Index (VIX) pushed above key technical levels at the 200/50-day moving averages last week.
  • Growth weakening versus value: This ratio continues to weaken, which strongly suggests that a shift away from “offensive” growth and towards more “defensive” value is underway.
  • Offensive sectors stalling: The traditional “risk-on” sectors in the TSX Composite are all showing signs of relative underperformance.

 

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TOP PICKS:

Javed Mirza's Top Picks

Javed Mirza, technical strategist at Raymond James , discusses his top picks: Alimentation Couche-Tard, Alamos Gold, and Finning International.

All three names are showing signs of strengthening price momentum, relative strength is accelerating versus the TSX Composite Index, and the short and intermediate-term price trends are up. In addition, the stocks are showing signs of institutional accumulation. All of these are technical positives that are supportive of further upside.

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
ATD TSX N N N
AGI TSX N N N
FTT TSX N N N

PAST PICKS: July 19, 2023

Javed Mirza's Past Picks

Javed Mirza, technical strategist at Raymond James, discusses his past picks: Ivanhoe Mines, National Bank of Canada, Franco-Nevada.

Ivanhoe Mines (IVN TSX)

  • Then: $12.80
  • Now: $18.87
  • Return: 47 per cent
  • Total Return: 47 per cent

National Bank of Canada (NA TSX)

  • Then: $100.95
  • Now: $111.44
  • Return: 10 per cent
  • Total Return: 14 per cent

Franco-Nevada (FNV TSX)

  • Then: $195.40
  • Now: $169.07
  • Return: -13 per cent
  • Total Return: -13 per cent

Total Return Average: 16 per cent

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
IVN TSX N N N
NA TSX N N N
FNV TSX N N N