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

Market Outlook The market has a lot of volatility thanks to the Trump Administration, he thinks. The market is overly optimistic on a successful conclusion of the trade war with China. The likelihood of the US President pulling the rug out from under the negotiations is highly likely and will create a great buying opportunity as it is not expected by the market. Emerging markets were well over-sold last year and are due for recovery this year. In the oil markets he believes the market will be able to manage the shortage of Iranian barrels. He thinks the Canadian dollar offers good opportunity for investment, but Canada is too narrow a market to attract global investors.

NEB Approval of Trans Mountain Pipeline. At this point he believes the project is necessary to be able to get oil to new markets. He is in favour of the project, but believes it will be 4-5 years yet to go, because of the regulatory process -- considering the 156 conditions attached.

The S&P 500 (around 2,800 now) made three attempts before the fall correction to punch above 2,800 and failed. The challenge for the market now is that the markets are a little overbought short-term. Also, momentum is currently high. Gievn this, he's been raising cash. No, doom and gloom is not coming, but things are just a little overbought. Lately, the market has been moving in extremes with a sharp drop in December, but a huge gain in January. Since the start of the year, we've hardly had any down days--and he's worried. He doesn't like the stampede out and in,. and he prefers the more orderly ups and downs of a market.

Market. He is very bullish on copper. He sees upside into 2021. We just broke out of a sideways trading range. It needs to get to $3 and then break out. He does not think we will break through 2011 highs, but we could get up to $4. The secular bear market in commodities will continue for 5 to 10 years and it will be hard for copper to break through these highs. Commodities will have another downdraft in 2021. He is seeing a short term pull back to $50 on oil. That should be support and where you should step in. Materials will play catch up here. He is watching KEL-T. If we close above $5.03 we will see upside all the way to $5.74. We have a basing pattern going on.

The beauty of technical analysis is that you can apply it to any instrument where you have the history and the volume. Reduce exposure to the weakest stocks and sectors and increase for the strongest. The best stocks are trading above their 50 and 200 day moving averages. You can then go further and look at relative strength.

200 and 50 day moving averages. The 50 day is a great proxy for the short term and the 200 is a great proxy for the intermediate to long term trend. Focus on stocks that are above these moving averages.

Market Outlook - Two drivers in the market now: The Fed maybe staying dovish and now Poloz now saying the same again. The view is still uncertain from here. This has been a hated bull market since 2009 and this recovery has been hated as well. The pain trade is higher. Not enough people is allocated. The earnings bar is low which is supportive. The next mantra now is that once the US and China sign a deal you have to sell on the news. The market is not expecting a rollback of the 10%. He sees the S&P500 at 3000. There is no magic here. We passed the technical resistance which is around 2700-ish. There could be a dip like in December 2018 if the Fed starts to rise rates and US and China impale themselves.

What is a good sector to deploy cash now? He would look into global financials, health care and technology. Longer term he would go with technology. It is not really that expensive given its growth rates higher. There are many ETFs to access it like XLK. In terms of individual names Google [Alphabet (GOOGL-Q)] shows high growth rates and attractive valuation.

Market Outlook He is generally bullish. We have had a great year in just six weeks -- TSX up 10% already. The market is awaiting a resolution between the US and China on the trade front. This should bring back investor confidence. There is slowing earnings growth, so we need to proceed with cautious optimism. We might expect to see more M&A activity as confidence returns -- KWH.UN-T and SUM-T, for example today.

TSX rises above 16000 since October. Interesting couple of months. December selloff didn't make sense. The bounce was sharper than expected. Not sure what market's discounting. Fed's changed mind about raising rates. Market reacts to every bit of news on US-China trade.

Fed minutes. There's more consensus now than a month ago. Dot plot had people freaked out. Interest rate increases were discombobulating. Chair got it wrong, but he clarified what he meant on balance sheets and interest rates, and the market calmed down.

China-US trade relations. Important for Trump to reach resolution for the 2020 election. China's economy is transitioning from exports to a more domestic consumer. Issues are complex, as it's about technology in addition to trade. Market's expecting a deal, and we will get one, but the question is what that deal will look like.

Buying the dips can work to degree, but generally he's not a fan of dollar-cost averaging. He buys stocks when stocks or the markets are way out of favour. In December, he bought a few stocks--it was not cheap, but cheaper than usual. Governments around the world are in bad shape, like Italy and Canada, because they carry a lot of debt. When the recession comes, those governments have little ammunition. Governments should have been paying down their debts. There are difficult days ahead. SNC is too expensive and the fall-out will continue, though he considers the fall-out overblown. It's still a great Canadian corporation.

You would average down, but would you ever break your rule and average up? Averaging up, no. If I can buy a stock at a particular price, why would I pay more? Even if the reward behind a stock has increase dramatically, he still won't. No. He stays within his discipline. Secondly, he would average down ONCE, not twice. He learned from past mistakes when averaged down three times on a stock and got wiped out for a lot of money. Overall, he's had a lot of success averaging down.

Per capita, US goverment debt is lower than Canadian, so he disagrees with the opening comment that our debt situation is that bad. He politely disagrees. True, per capita, American debt is higher than ours, but both situations are bad. Our Canadian debt load is huge and getting bigger. The Liberals are saying they will erase the deficit in 2042: How can they forecast that far ahead? That's stupid. Canada is in very bad shape. America: He disagrees with Trump on many, many things. He should be paying down the debt when the economy is good. It makes zero sense. He doubts he will be re-elected.