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

Before Christmas, he called a correction in January and it's happening.

What indicators do you use? First, his father was a stockbroker who taught him to chart stocks; he'd record the volume by hand. He's a big fan of on-balance volume. Also uses price momentum and relative strength (strength of a stock relative to its index). More and more the market is technically driven. He uses these standard indicators used by many.

Caller sells winners too soon. What length of chart to look at for a short-term trade of 1-3 months? He looks at three time frames: long-term monthly, weekly (3-5 years duration), and daily (a year duration). So, look at weekly to determine long-term trend and direction, and daily to choose entry or sell points.

A four-year cycle started in Dec. 2018 with upside into 2021. This current correction is an opportunity, but wait--don't step in yet. There's more downside to come. His S&P target is 3,100, or 5% downside from today's close. So, the hardest thing to do in coming weeks is....nothing. Wait. Overall, he's very bullish for the rest of the year....Gold has played out perfectly since Dec. 24. Say this correction we're in now last another 2-3 weeks. By the end of Febraury, there's a window of seasonality for gold (Oct-Feb) when demand peaks. Gold is fine as a place to hide during this correction. Hedgers are very short gold; gold could come under pressure into summer.... Oil's support level is $50, then $40. There could be continued downside. We're seeing lower highs and lows. Commodities are in a bear market that he expects to last 10 years--but with pockets of performance. In the next week or two, there'll be an opportunity to add some energy exposure.

Market Outlook Caronavirus is creating short term moves down, including today. This is creating some really good buys, with some stocks down 10-15% -- especially energies and small caps. Averaging in should be a good strategy. The WHO announced a health emergency yesterday afternoon and stocks rallied into the close as it was the believe that China is going to be able to contain it.

When the market reaches these new highs, the moment it shows that there is some cracking, then people will try to take their gains and exit. If you're sitting on profits, it might be the time people take their profits.

The profits are still there because of the long run we've had. He expects that the sell-off will continue for a couple days or the next week. He doesn't see any news that would make it go down more. However, there is momentum to continue going down.

He thinks there could be some problems with the coronavirus, but China is better organized that during SARS. The tricky part is the longer incubation period that helps the virus spread. China has shut everything down, and it's interesting to see how this pans out. Canada and the US are on guard, but it's not like SARS. It's more a Chinese problem generally but they will over come it.

He wonders if consumption will fall because of the virus. If you're nervous about your energy stocks, people might jump off. Energy stocks might not perform until the anti-fossil fuel group gets rid of all their positions. The sector is super cheap, but they could stay cheap for quite a while. Energy is not partaking in the lift that we see in other sectors.

Market. GDP numbers were not surprising. Corona is certainly a negative but from SARS we would think it will be passing in 6 months. But all of this is impacting oil prices and oil companies are suffering. The world has done a spectacular job of reacting quickly on this Corona issue and there could be some short term impact on global GDP. FB-Q dropped after release of their numbers and so many of these stocks can have dramatic drops with mildly disappointing numbers. China growth and global growth could continue to slow. The stock market rose last year due to multiples rising, and not earnings growth.

Japan small caps. Investors should understand what they are buying. He would invest in a fund that owns Japanese stocks. You have to watch out for derivatives.

ETFs are a tough investment from a bond perspective because they don’t track bond indices very well. Buy a fund that holds underlying high yield bonds that is hedged to Canadian dollars.

US Municipal bonds. US citizens get a tax break. They are priced efficiently for those with the tax advantage. He would look elsewhere. The higher bond market offers better value. 10 year bonds are under 2% and offer little value. Shorter bonds yield above inflation and you are not locked in for a long time.

Emerging Market Country High Yield Bonds. Don't buy emerging market country high yield bonds. If you own a country's high yield debt you don’t suddenly own part of the country and they can do what they want with the debt.

Markets in the wake of coronavirus. Something else to worry about. In past epidemics, once the WHO declares an emergency, the market moves up. Not sure if that will happen again, but historically it's happened almost every single time.