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

Timeframe on Short Term and Intermediate Term indicators? Short-term is typically around a month or less, but could even be 1 or 2 weeks. An intermediate term is over a month, and up to 3-6 months.

Are different indicators more important based on whether a stock price is trending or if it is range bound? You look for trendlines and formations on the weekly chart for at least 3-5 years, and then you start working down. From there, you are looking at the Moving Averages, then at Volume, then at the smaller stuff to refine your entry. EG. If you see an uptrend in a seasonal period, you start looking at things like momentum indicators, stochastics, MACD, RSI, etc. Those are the refining tools. You really have to understand the phase of the market, if it is in an uptrend, topping, downtrend, or making a base. If you don’t understand what the stock is doing, which phase it is in, then there is no sense in looking at some sort of short-term momentum indicators to see if it is overbought or oversold.

Natural gas? Likes natural gas a lot. Seasonally this can come into its own very soon, within the next few weeks. That would be its Buy point. It looks to be forming a head and shoulders bottom like it did in 2012, right at the same time of year. It broke out in the latter part of August, and tested the neck line. If it can successfully test the neck line at $2.60-$2.70 and move up, he thinks it has lots of upside.

Market. When valuations are being stretched, it can’t go on forever. As a value investor, it is getting harder and harder to identify securities that he thinks are really good, long term value to Buy, as a result, he is almost in the mode now where he is taking more profits than he is reinvesting money. You never know what will make the market crack. It could be the US election, North Korea launching a missile, etc.

Uranium? This has always been a difficult element for him to get his head around. It never seems to follow supply/demand mathematics. After Fukushima in Japan, everything stalled out. Politics always seemed to get in the way, with the possible exception of China.

REITs? Investors have concerns about the interest rate environment, and REITs would be affected if rates went up. Canada has had a run on real estate to the point where multiples in Vancouver and Toronto are fairly high. You have very low cap rates and very high values, which is a very formidable position for REITs to be in. He would stick with the high quality REITs.

Market. The S&P 500 and Dow are now trying to make another all-time high. From a monetary point of view and bond point of view this is warranted, but he is cautious from an earnings perspective. US earnings have gone down over past quarters, so the market going up is a bit of a countertrend, but the offer of what else is available is warranted, just because of interest rates being so low. December for an interest rate increase might be a more realistic option. The Fed seems quite concerned about global issues so they keep rescinding back their talk of interest rate hikes. Even if they raise rates, they are still going to be at very low levels, which is why we are seeing markets going to new highs. He is fairly constructive on the economy. The US and emerging markets are really driving the growth that we are seeing now. Japan and China seem to be bottoming. That is offset by the euro area and the UK which could see growth coming down.

Canadian banks? Over the past 15+ years they have grown at a rate of double the GDP, which is hard to do consistently. We have had a housing market that has run, and debt levels that have increased. His view is that banks’ growth is slowing. Dividends are very important. A lot of the banks beat was done on the cost side. If you are looking for income, they are great investments, but as a capital appreciation, he doesn’t think they are going to rise at the pace they have.

Market. On his funds, he has a risk overlay. It indicates how much risk he should be taking, which he uses as a reason to increase cash, decrease cash, buy Put options, Short stocks, etc. For the last number of months, he has had very aggressive positive signals. Also credit spreads across Canada, the US and globally, have really come in, to the tune of 50% since the beginning of the year. This tells him that we are in an environment where you can take a little more risk in a portfolio. He is about 92% exposed to the market. Feels the probability of a rate hike is increasing, and wouldn’t be surprised to see one in December.

Markets. The conventional wisdom is that oil prices have bottomed. What is not clear is what the recovery looks like. Does it reach balance next year? In the $50ish range, there is still debt stress to oil companies in the first quarter. He does not think there has been any volatility in the last few months. Markets came up and leveled off. He is not sure the volatility is there and is not sure the underwriting for the banks is going to be there. ZWB-T with a covered call overlay is the way to play the banks. Real estate could be another headwind. ATD.B-T have a great story – growth by acquisition. New highs today in the stock. He does not like the break out and so does not trade it. He likes XST-T with ATD.B-T as a major holding as a major place to play but it is not particularly cheap right now.

Volatility – A bump coming in September? He has been expecting this with the election and into November. So far it has been pretty clean. The event he sees is the Italian referendum in October. There is a huge potential for an anti-EU party running Italy and wanting to leave the EU. The US election will not cause the uncertainty that it previously looked like it would.

NASDAQ US Bank ETF? If you search you can get a whole series. XLF-N is the entire financial sector. KRE-N is regional banks. Check out ETF.COM.

Packaging Companies ETF? There is not one. It is too narrow. There is a company in the US that builds customer ETFs. He is going to get details and tweet it out. You can make out your own basket of ETFs. You have to open a US based investment account.

Educational Segment. Why rates can rise and what to do to take advantage. Bernanke has used this week’s speech in the past to change things. Last week we had the minutes from the July meeting causing the market to see no raised rates. Since then a number of Fed speakers have said it could change. There is still only a 26% chance they raise rates in September. He thinks the Fed are not considering the election in making interest rate increase decisions. He thinks there is a much higher chance that rates go up in September. He recommends sitting in US cash and make 3-4% while you wait. DLR-T and PSU.U-T and SHV-N play the US dollar as well.

Markets. Lots of investors sold in May and went away or when Brexit happened, but a lot came back in. It is all about yield. People in Europe have been forced to pay to have their money invested. These investors are investing elsewhere, buying stocks just to get yield. He is afraid central banks will pull the rug out from under us. He is not focused on a rate hike so much as the rates themselves. European buyers are coming in and buying our treasuries. Pretty well fully invested but is avoiding high beta stocks. Sees opportunities in the utilities sector although it has no growth so he would not want to own it now. Oil stocks are cheap. They've rallied, but are well below their peaks. The financial sector is cheap and he likes it although it is high beta.