Javed Mirza, technical analyst at Canaccord Genuity
Focus: Technical analysis

MARKET OUTLOOK

Within the ongoing secular bull market in equities, an intermediate-term (two to four months) correction is underway. In our view, equity markets are poised to give birth to a new four-year cycle. Previous four-year-cycle lows occurred in 2011 (the euro crisis) and 2015 (the yuan revaluation).

Equity markets remain in a secular bull market, which should see downside capped around 20 per cent during this corrective phase. This translates into potential downside targets of 2,350 on the S&P 500 and 13,270 on the TSX Composite, roughly another 10 per cent from current levels. We view this four-year-cycle reset as an opportunity to add exposure to the ongoing secular bull market in equities. 

A short-term low took hold on Friday and should support a near-term countertrend bounce. This countertrend bounce should stall at the levels we’ve highlighted. It would take a close above the 50/200-day moving averages, on the S&P 500, Dow Jones Industrials, and Dow Jones Transports to signal an “all-clear” and that a new intermediate-term up-leg was developing.

TOP PICKS

DREAM GLOBAL REIT (DRG_u.TO)

Dream Global has an improving technical profile as the stock is seeing relative strength versus the TSX Composite improve and on-balance-volume is showing signs of buying pressure, both of which are technical positives.

CINEPLEX (CGX.TO)

Cineplex has a strong technical profile. The stock is seeing price momentum and relative strength versus the TSX Composite trend higher and on-balance-volume is showing signs of accumulation, all of which are technical positives.

ALIMENTATION COUCHE-TARD (ATDb.TO)

Couche-Tard has an improving technical profile as the stock is seeing relative strength versus the TSX Composite trend higher and on-balance-volume is showing signs of buying pressure, both of which are technical positives.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
DRG-U N N Y
CGX N N Y
ATDb N N Y

 

PAST PICKS: AUG. 21, 2018

CONSTELLATION SOFTWARE (CSU.TO)

  • Then: $920.00
  • Now: $901.13
  • Return: -2%
  • Total return: -2%

TD BANK (TD.TO)

  • Then: $78.66
  • Now: $72.78
  • Return: -7%
  • Total return: -7%

CGI GROUP (GIBa.TO)

  • Then: $84.91
  • Now: $81.31
  • Return: -4%
  • Total return: -4%

Total return average: -4%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
CSU N N Y
TD N N Y
GIBa N N Y

 

WEBSITE: canaccordgenuity.com