A Comment -- General Comments From an Expert (A Commentary)

Natural gas. The issue is that with some of the newer technologies, a lot of natural gas has been found in the last few years. Prices have been very weak because there is not enough infrastructure in place to move it to market effectively. This is why he likes energy infrastructure companies. Long-term, you will see natural gas usage go up but, where is the inflection point? Probably early at this point but you could nibble away a little bit here at some of the bigger names.

Oil. Is the price of oil being run-up because of geopolitical risks such as Iran and Syria or is it because there is lots of demand out there? He feels the demand side is weak because if you look at the price of Brent oil versus West Texas, there is an enormous spread between the 2. He would prefer oil producers that are actually getting Brent pricing such as Vermillion (VET-T) which also has a 4% yield.

Markets. This is the summer doldrums. We have gone through the earnings season and for the most part. 65% of S&P companies beat the consensus estimate, which is pretty normal. This sort of put the EU and US problems on the back burner. He is sure that they will start focusing on those problems again. He doesn’t want to be overly aggressive but doesn’t want to be out of the market. If you can get paid to wait with some good yielding names then he’ll be happy to add them.

Canadian banks. In pretty decent shape. Have been in the doldrums for the last 4-6 months or so. Valuations are down into the 10X earnings range and the group yields 3.5%-5%. Thinks you are safe here.

US banks. Generally speaking are in a lot better position than they were a couple of years ago. Have all done some equity raises and solidified balance sheets. Scrutiny increased dramatically over that period and he thinks their opportunities to generate huge rates of return and ROEs may be diminished. However the valuations still allow you to generate some decent returns over the next while.

Any good airline stocks that can be bought on the North American market? Prefers growth and dividends. You can’t get growth on airline stocks. Will probably never buy an airline stock. People have lost a lot of money over the years.

Markets. The hope that the central banks will do something seems to have kept the market rallying. Equities are cheap and, relative to bonds will do quite well over the next 5-10 years. There are a lot of short-term problems. Likes some of the industrial spaces such as auto parts and any Cdn names leveraged to US housing.

Interest Rates. This is the bottom of the interest rates and is the Sell regeneration of the bonds. It won't happen overnight so if you are looking at short bonds, you have to be careful. The trend now is that we are going to work higher.

Markets. When you see a bunch of diverse stocks making 52-week highs, as is currently happening, it is very bullish so there is some leadership coming in.

Market breadth. Advance/decline line indicates how many stocks are going up and how many are going down. On the NYSE, this has broken through a new high. S&P has not followed yet but he thinks it should follow soon.

When is a volume spike bullish? Technicians like volume if there is a breakout. When a stock is going sideways and makes a sudden move to the upside, they want volume at the beginning of the move.

Short-term laddered government bonds? He is bearish on bonds. Future for long bonds is probably not good. As an investor, shorten the duration. A laddered ETF is sort of doing that.

What books would you recommend for someone to begin understanding stocks? 2 books he would recommend. Technical Analysis Explained by Martin Pring and after that get the Elliott Wave Principle by Frost and Proctor. The latter one is a must read.

What measures help determine whether a breakout has wings? A breakout will usually occurs from a period of congestion. You can also have a breakout from a long base.. The most popular consolidation patterns is a large triangle. You need to see volume on the breakout.