Jeff Parent, chief investment officer at Castlemoore Inc.
Focus: Technical analysis

MARKET OUTLOOK

There’s not a lot to like in the markets right now. Evidence for a rally or breakout from this point is limited.

In Canada, the financials led by the banks have been in a rolling consolidating pattern for two years, with some major weakness in CIBC, Bank of Montreal and Scotiabank. After a substantial rally this year, energy looked hopeful, but has faded. Gold, which was a bright point in May, is potentially dimming. With these three sectors making up the majority of our index, there’s not a lot to drive us higher. I’m underweight in each of these sectors, but wait patiently for an opportunity to buy.

In the U.S., the major indexes are struggling to break above the highs set in September 2018 and May this year, creating a strong resistance point. The strong movement at the beginning of the year was a retracement and now we’re seeing buyers exhaustion set in. Bottom-up stock picking is the order of the day.

TOP PICKS

Jeff Parent's Top Picks

Jeff Parent of Castlemoore shares his top picks: Maxar, FMC Corp and Steel Dynamics.

MAXAR TECHNOLOGIES (MAXR.TO)

Due to risk, this would be a small initial position that you could build on. Reward potential is a gain to $13.80 to fill the January gap. Selling volume has been decreasing, and new buyers are stepping in. Sell below $8.20.

FMC CORP (FMC.N)

FMC is a nicely diversified and lower-risk company. It’s breaking out into new high territory after spending a lot of time in the$ 70s. I could see this hitting $100 in 12 months, but get out below $75.

STEEL DYNAMICS (STLD.O)

This is a value play. It has short-term potential to rally up to $35. Guidance last week helped to break a continuation of a sell-off. Volume supports a continuation of the turnaround. Sell below $29.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MACR N N N
FMC N N N
STLD N N N

 

PAST PICKS: JULY 27, 2018

Jeff Parent's Past Picks

Jeff Parent of Castlemoore reviews his past picks: Helix Energy Solutions, Alaris Royalty and Parkland Fuel.

HELIX ENERGY SOLUTIONS GROUP (HLX.N)

  • Then: $9.94
  • Now: $8.63
  • Return: -13%
  • Total return: -13%

ALARIS ROYALTY (AD.TO)

  • Then: $17.67
  • Now: $18.81
  • Return: 6%
  • Total return: 16%

PARKLAND FUEL (PKI.TO)

  • Then: $35.36
  • Now: $41.55
  • Return: 18%
  • Total return: 21%

Total return average: 8%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
HLX N N N
AD Y N Y
PKI Y N Y

 

WEBSITE: www.castlemoore.com