Keith Richards, portfolio manager at ValueTrend Wealth Management of Worldsource Securities
Focus: Technical analysis

_______________________________________________________________

MARKET OUTLOOK

We anticipate a continued rally on the stock markets for the coming weeks. We will begin to raise cash again as the charts and seasonal trends dictate. I noted in several ValueTrend Updates in 2017 that the runaway upward trending market was unsustainable and dangerous. That lack of volatility was an historic freak show. It's never happened before, it was simply not normal and it couldn't last. Because the market acted so irrationally for so long,  there's a lot of exuberance to wash out of the markets at present time. As we presented in this blog, the current choppy pattern bears resemblance to the pattern prior to the 22 per cent pullback in the summer of 2011.

It's in this environment that we expect to reap the greatest reward for our clients by selling into markets as/if/when they show signs of weakening, and then redeploying the cash as/if/when markets present a new point of entry and lower stock prices. This highly active approach to achieving more predictable performance is our greatest strength, and it's what ValueTrend has been built upon. We’re happy to report that our Equity platform recently hit new highs in the midst of the U.S. and Canadian markets declining. As is typical to our technical style, we tend to enjoy a more volatile market and prosper within it.

TOP PICKS

BMO LOW VOLATILITY CANADIAN EQUITY ETF (ZLB.TO)

Now is the time to hold low beta.

CONSUMER STAPLES SELECT SECTOR SPDR FUND (XLP)

Perhaps I'm a glutton for punishment, having been so hammered on this position recently. But ever the contrarian, methinks the sector will bounce a bit between now and my next show. I’m thinking it will get to $53 near-term, where I might sell it.

BMO INDIA EQUITY ETF (ZID.TO)

It’s on trend. We’ve owned it for some time and it's recently pulled back to trendline. Probably a good time for new money to enter it.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
ZLB Y Y Y
XLP Y Y Y
ZID Y Y Y

 

PAST PICKS: FEB. 5, 2018

SPDR CONSUMER STAPLES (XLP)

This sector has been outright hammered and has broken support. The seasonal period approaches and the contrarian sentiment signals suggest its oversold. I'm holding it to see if it bounces to its breakdown level of $53-ish, but what a disastrous sector.

  • Then: $54.42
  • Now: $50.01
  • Return: -8.10%
  • Total return: -7.58%

BROOKFIELD ASSET MANAGEMENT (BAMa.TO)

On trend. We still hold and like it as a longer-termed hold.

  • Then: $48.50
  • Now: $50.48
  • Return: 4.11%
  • Total return: 4.51%

CGI GROUP (GIBa.TO)

Earnings report pushed it up despite lousy markets since my last show. We still like it. It’s on trend.

  • Then: $70.29
  • Now: $74.42
  • Return: 5.87%
  • Total return: 5.87%

Total return average: 0.93%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
XLP Y Y Y
BAMa Y Y Y
GIBa Y Y Y

 
 

FUND PROFILE

ValueTrend Equity Portfolio
Performance as of: April 30, 2018

  • 1 Month: 2.2% fund, 1.4% index
  • 1 Year: 3.7% fund, 1.8% index
  • 3 Year: 5.1% fund, 2.0% index

* Index: North American index

TWITTER: @ValueTrend
WEBSITE: www.valuetrend.ca