Keith Richards, president and chief portfolio manager at ValueTrend Wealth Management
Focus: Technical analysis

MARKET OUTLOOK

At ValueTrend, we had concerns of the S&P 500 pausing and failing at the old highs of around 2,950 basis points – which it did some three times over the past 18 months. That fear was eliminated after the market took out 2,950 and stayed above that level for the past three weeks. Our three-bar rule confirmed that the breakout is legitimate; that, along with the markets’ adherence over the 200-day/40-week simple moving average.

Although we reduced our cash position in our ValueTrend Equity Platform upon the breakout, I still think it’s prudent to hold a bit of cash for a few reasons:

  • Seasonality suggests that markets can often be volatile until late October.
  • We’re seeing some signs of “risk-on” again, which is good so long as it doesn’t run away on itself. There are early signs of that potential. For example, the VIX is getting close to my “complacency” level of 12. Meanwhile, money is starting to move back into risk-on stocks like the FAANGs, while it’s just now starting to rotate out of defensive positions like bonds. Again, this is good as long as it doesn’t go “too far” insofar as market complacency and sentiment.

TOP PICKS

Keith Richards' Top Picks

Keith Richards of ValueTrend shares his top picks: the EWG, Fairfax Financial and Allied Property REIT.

ISHARES GERMANY ETF (EWG.N)

Technically, EWG looks like it’s going to get back into around $30 per share or higher. Germany may be playing catch-up in the rate policy game to keep their economy on track, which can only help their markets.

FAIRFAX FINANCIAL (FFH.TO)

Fairfax has support near the high $500s and resistance in the mid $700s. We’re gunning for this stock to hit $700 to $750 in the coming year as it carries out its long-term trading pattern.

ALLIED PROPERTY REIT (AP_u.TO)

Allied is one of three REITs we hold as defensive positions. They all look like they will move sideways-to-marginally-higher over the summer, but they’re fairly safe and pay dividends.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
EWG Y Y Y
FFH Y Y Y
AP-U Y Y Y

 

PAST PICKS: APRIL 30, 2019

Keith Richards' Past Picks

Keith Richards of ValueTrend reviews his past picks: RioCan, Morgan Stanley and George Weston.

RIOCAN REIT (REI_u.TO)

  • Then: $25.76
  • Now: $26.04
  • Return: 1%
  • Total return: 2%

MORGAN STANLEY (MS.N)

  • Then: $48.25
  • Now: $44.43
  • Return: -8%
  • Total return: -8%

GEORGE WESTON (WN.TO)

  • Then: $100.03
  • Now: $100.90
  • Return: 1%
  • Total return: 1%

Total return average: -2%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
REI-U Y Y Y
MS Y Y Y
WN Y Y Y

 

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