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

Relative performance to sector vs. the broad market as an indicator in tech analysis? He looks at volume vs. price. A lot of trading means support at that price. For swing trading, you can use relative strength and short-term moving averages, but he doesn't do swing trading. He looks at relative strength in a sector vs. the index, but this is complicated. He removes the random components from the market, though, to look for a bottoming opportunity.

Market. There have been earnings disappointments. He continues to feel bitcoin is worth nothing. AI is going to be a growth space. China is slipping so it is important that China and the US come together with a trade deal soon. Quality of earnings and number of companies beating is in line but the amount by which a company beats is dropping and that is not a good sign. We have come off the bottom on the yield curve, but now it is flatting again. The Fed seems to be on hold with raising rates. We are heading for a recession and the question is only when.

Where to deploy cash raised in the last few days. He raised a lot of cash last week and the only money he put to work was emerging market debt. It is a currency play that might make 10%. He has just started doing this and will buy more. The ETF is EMM-Q. He has also written a lot of puts in the last few weeks.

REITs. Usually the last thing to fall going into a recession is REITs. They will fall significantly in a recession. This could be a 2020 or 2021 story. If they went 10% lower they might be interesting for a while.

S&P or NASDAQ in a 3x inverse leveraged ETF? He would never recommend it because of the erosion of net asset value. The most overvalued part of the market is the small caps so you could use a 1 times leveraged inverse as a trade.

Educational Segment. Guest - Barry Allan. He tries to have ETF products launched before the sector is going to perform very well. FGO-T has done 3.85% with lower risk. He thinks we have seen the peak in equity markets and the peak in bond markets. It does not mean we are going into recession tomorrow, however. The risk of owning long duration government bonds is minimized significantly now. He thinks it is an opportunity to accumulate long term government bonds. He sees pockets of value in short term high yield corporate bonds also. He is cautious on preferred shares and floating rate products.

Market. Speculative manias coming into the markets are usually indicative of a top. Global markets are slowing down and NASAQ companies get 44% of their sales from global markets. It was bound to happen that companies would guide down. We saw a bit of a rebound this year but now you are seeing companies impacted by a higher US$ and trade wars slowing growth. CAT-N is feeling the pinch. Canada is his focus. He thinks there have been bargains in Canada for the last few years. Last fall there was indiscriminant selling that created real bargains. He is sticking to sectors that are not that cyclical and have low sensitivity to the Canadian consumer like wine, retirement residences, cemeteries, etc. They are recession resistant.

Banks may decline over mortgage fears and debt concerns. Those are always fears. The banks look toppy, which means we're probably at the premium level. As a technical analysis, sell them.

Gold? $1,100-1,400 is his expected range. Once gold breaks above $1,400, which he expects, then it's time to look at gold stocks.

Market Outlook 2018 was a disaster year for energy investors. What we didn't see was the narrative around the Saudi production ramping up in support of the the Trump Administration Iranian embargo. However, exemptions were allowed for Iran and there was a clear long position for supply and traders sold oil and energy stocks. The late season tax loss selling was the most vicious he has seen in his career. This year is a year of rebuilding confidence for energy investors. He sees this as an opportunity for investors as upsides are easily 50-100%.

Venezuela impact on Canadian energy? Setting aside the humanitarian issues, this has the biggest impact on Canadian heavy companies. They have struggled with PDVSA, the national oil company, suffering from a massive brain drain. Fields have been under invested for years. Even a change of government will not allow them to turn around production quickly -- it may take several years. As their production has been falling it has been bullish for Canada and has contributed to the $9 differentials now.

They kicked the can down the road by re-opening the US government today. Now, can the US solve the China tariff issue? Then, we can focus on the economy and fundamentals. We'll return to mediocre or slightly above average 3-7% earnings growth, but don't expect 18% growth as we did in 2008 right before that recession. This is good. Of course, some companies like Intel today will disappoint, but that's normal. Don't invest with your gut (emotional), but stick to the long-term. Investing is a marathon, not a sprint. When stocks plunge....do nothing. Nobody knowd what will happen, but we know what works over time. Be patient.

Market. Christmas Eve was the bottom for the energy sector. A massive amount of hedge funds where long oil and short natural gas. They were wrong on both calls. The FANG stocks were going down at the same time. He thinks it is not over and that there may be one more pull back in energy. There may be one more buying opportunity. He thinks WTI will get above $70 this year.

If the price of oil goes to $70 and then 80 or 100, it is about worldwide events. Enbridge line three will probably be put on. Heavy oil has more of a problem than lighter grades of oil. Lighter grades of oil have more to do with the worldwide price of oil. We could see bills get stalled in government that are supposed to stall the egress of oil.