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
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