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

Gold stocks. are trading at about a 35 year low. In the future they may do better than other equities. He is not a gold bug but he would play US and Canadian gold ETFs. He is overweight in gold right now.

Market. The market needs to hold the February lows or we could see it go lower. The overall markets are tricky right now, as has the whole year. We are not seeing too many tradable trends. RT-T is a good indication of what the banks have done.

The U.S. Midterms tomorrow won't make a difference. The market is very high and tired. But if the Dems win the House (not Senate) will be a relief, because it'll stop Trump from doing dumb things. If the Republicans win, then Trump's tax cuts will go through. The markets will go up either way in a relief rally. But if the Dems win BOTH houses, then we'll have a real stalemate in Washington. Women of all stripes and ages are turning out to vote. This looks like bad news for the Republicans. Trade (US-China tensions) is an issue, but really the market is expensive. The fundamentals, including earnings, are slowing down or flat. We're not seeing big growth or whether that value is coming into the market. The market is carrying overvalued stocks which have lately come down. Markets simply get tired of carrying that load, then say, "Forget it."

Where do you see the S&P 500 going? It's right between 2,550 and 3,100, a nice trading range. The S&P will stay here, unless there's a setback. He hopes there's more downside so he can buy stocks cheaper. October is traditionally bearish, and this one was. Powerful resistance on the way down and powerful support on the way

He feels the S&P is at fair value and has another 30% of upside. He feels the Canadian dollar has more weakness to come. He expects the Republicans to win more seats in the House during the Mid-Terms, which would cause a substantial rally in the US markets. October has always been a seasonally weak month, so he expects a quick rebound in markets. Autos, consumer discretionary and other sectors have been recently decimated and are great value if the market is able to side step a major recession in 2019. He believes President Trump is correct in going after China as it pertains to the massive trade surplus with the US.

This morning the U.S. wage increase scared the market, because this means the US Fed will likely raise interest rates. ETFs and index funds exacerbate volatility at the end of the day. Add to the Trump, the US Midterms will be Tuesday. If the Dems capture the House, then Wall St. won't benefit as much from deregulation Next April with Q1 earnings, corporations will no longer benefit from the tax cut, when we will likely see reality. He forecasts only 5-10% earnings growth, so he can't justify current high multiples. The Fed wants the interest rate to be 4-5% for wiggle room during a recesssion. The riding USD is pressuring currencies in emerging markets leading to a global slowdown or American companies exposed to EM (i.e. tech stocks) which are getting hit now. We saw this in the 1997 Asian Contagion, then two years later the tech bubble burst. Investors should be conservative now. We could get anything from a 20-50% correction down the road. Having no more than 20% cash is necessary, giving you downside protection. Remember that dividends will always pay, regardless of the price of the stock. Look for dividend growers.

Market. He thinks we are still in a long term secular bull market into the mid to late 2020s. We could see lower before we go higher in the current correction. We had two corrective phases in this market, 2011 and, 2015. In both cases it was currency revaluations. It could end up being a 20% correction that we are in now. He thinks there will be further choppiness in the month or two ahead. In looking for a bottom he wants to see the VIX hit a pretty high level. He wants to see pretty significant drops with a higher close and higher volume on a day.

How long will the bull market last? It will last until the mid-late 2020s. He thinks we are just having a correction. If you have cash right now, it is a great position for the next couple of months. There will be a 3-4 year up leg after that.

Market Outlook Back in October he suggested that an indicator he follows (Bear-o-meter) went to high risk mode. Now it moved to neutral almost close to bullish. We need other factors to enter into bullish territory. He needs three positive days to begin buying. Today is a good day as it is that third day. technical analysts are not market timers as some people believe but rather risk assessment people. We look for references that the market hit bottom. Smart money is starting to buy and retail money is panicking.

Thankfully October is over. It was ugly. It went down because of Trump, China, rising rates. Why October? Doesn't know. The U.S. Midterms? He has no clue what'll happen. In Q3, the U.S. market went up 7.7%. We were due for a drop. We've seen two corrections in the same year, which is rare. Then again, corporate profits are so damn good, so good that interest rates are rising. But that's hurting the U.S. housing market--and the same effect will happen here. You got to take the good with the bad. The TSX is -7% YTD, which stinks. He's fully invested, owning more stocks outside Canada than inside. Bond returns stinks--he's avoiding them.

Thoughts on the cannabis market? He doesn't know how to value these stocks. They've run so fast, so high with zero profits. You're playing with fire.

Gold? He owns none of it. Gold doesn't pay a dividend. It's made nobody money in the long term. You must pay holding costs. Gold has lost its lustre. What's the actual physical use for gold?

Where's the S&P 500 going? Over the last 10 years, the S&P has dropped over 5% 23 times or twice a year. Usually it stabilizes on average in 45 days and goes higher each time. Is this latest correction going to recover? Yes, but nobody knows how long it'll take. Remember: stock prices follow earnings--and Q3 is up 29% so far. Just be comfortable with volatility--that's the price of owning stocks as opposed to, say, bonds.