Keith Richards, president and chief portfolio manager, ValueTrend Wealth Management

FOCUS: Technical analysis 

 MARKET OUTLOOK:

Markets entered into a bearish period, as I suggested would happen more than a year ago. ValueTrend was prepared for that bear. Markets are now entrenched in a normal basing phase, which is normal after a bear market. During a base, buy and hold simply isn’t going to cut it. Basing patterns are zigzag markets. Markets rise and fall between moments of optimism and pessimism. During a base, the market does not break out into a new bull trend. Yet, it doesn’t make new lows either.

The charts of North American markets illustrate this pattern. Beyond the index price charts, indicators such as breadth (TRAN vs INDU for example), and negative divergences by risk-on securities (CCC/JNK bonds, and small-cap stocks) suggest that the base may continue for a while.

It is for this reason that we continue to hold defensive positions and those with less correlation to the broad markets. We like utilities, value, and we are patiently stepping into commodities. We’re also doing selective short termed trades. We’ve added some unique international positions as well. We hold about one-third cash in our equity platforms, but we are nimble with that cash. For now, we’ll buy at technical support tests, and then reduce equities at the current levels (resistance). 

At some point, the market will break its resistance point and begin a bull market trend. That is when we will begin to step in with our cash in a more committed fashion. The charts will dictate when that happens.

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TOP PICKS

Keith Richards' Top Picks

Keith Richards, president and chief portfolio manager at ValueTrend Wealth Management, discusses his top picks: Suncor, TD Bank, and Cash.

These are short termed trades, not to be held past their targets. 

Suncor (SU TSX):

Sell at $48-$50

TD Bank (TD TSX):

Sell at $88-90

Cash

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
SU TSX Y Y Y
TD TSX Y Y Y
CASH Y Y Y

 

PAST PICKS: March 6, 2023

Keith Richards' Past Picks

Keith Richards, president and chief portfolio manager at ValueTrend Wealth Management, discusses his past picks: Keyera, BMO Base Metals ETF, and FirstService.

Keyera (KEY TSX)

  • Then: $31.12
  • Now: $30.59
  • Return: -2%
  • Total Return: -1%

BMO Base Metals ETF (ZMT TSX)

  • Then: $58.12
  • Now: $51.75
  • Return: -11%
  • Total Return: -11%

FirstService (FSV TSX)

  • Then: $137.06
  • Now: $142.66
  • Return: 4%
  • Total Return: 4%

Total Return Average: -3%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
 KEY TSX Y Y Y
ZMT TSX Y Y Y
FSV TSX Y Y Y