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Stock Opinions by Don Vialoux

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Market. We so oversold that the bullish percent index reached the lowest level in twenty years last week for both Canada and the US. These levels give us a benchmark as to where we are going into 2019. In July 2002 a low level was set and then the S&P went up 24%. In 2008 it went up 27% after such a level. In Canada the TSX in 2002 went up 10% right after a bullish percent index low, and similar levels in the years listed above. After this next correction, it is a multi-year low. As an investor you want to hold off until this low coming this summer or late fall. Traders can have some fun in the meantime. This is just a 4-year spike down on the bull market. We've seen most of the correction. It is a strange market but you can take advantage by owning specific securities in the short term. The US index has completed a double top pattern in the last two weeks. It means commodity stock prices will start moving higher. Gold is strong until mid-Dec. until the end of Feb. and that has clicked in. Copper normally bottoms this time of year and then goes higher until May of each year. Crude oil bottoms the third week in January. You need to play the seasons, but remember that the seasons do end.
Unknown
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Were ETFs exacerbating the selling in December? ETFs are a greater percentage of trading activity in markets. Between Christmas and New year, volumes are low and concentrated on retail investors. ETFs have a greater influence during this period of time. It ends next week so don’t be too concerned. Indiscriminant selling due to ETF sales is concerning and was so recently when a lot of computer trading took place. It exacerbated the downside but now it is going to exacerbate the upside going into 2019.
Unknown
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Outlook for oil into the summer. Crude oil has a history of bottoming in the middle of January until May. This kind of volatility on the down side means increased volatility on the upside later. Crude prices are trying to bottom. They should then turn up.
Unknown
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How far will we go down in the S&P? He sees the S&P going up in the first quarter and then below the previous low following that and it will then be a multiyear low for the index. It will be a new floor of support. It will then slowly move higher.
Unknown
WAIT
Canadian Bank Stocks. A good time to buy in? Historically the bank stocks in Canada reach a low in January and then move higher into April. Currently they are in a downtrend but within the next month the sector will bottom. There is longer term support at current levels to the downside. Risk is minimal. Dividend yields could go higher from current levels.
Unknown
WATCH
This is more of the junior play. Marijuana does not have the history for him to do a seasonality analysis. Technically it has been in a downward trend and is at a key support level. You should see it bottom here. Major companies are announcing buying into these marijuana companies and that is a good thing. They need the support of major brands. You should not try to trade more than 10% of the 6 month daily average volume.
E.T.F.'s
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Educational Segment. There is going to be another leg lower. The Dow normally does this in a pre-election year: The first quarter goes up significantly. It is the second strongest quarter of the 4 year cycle (5.2%). There was the shutdown of the government which they will get rid of. During the last 18 periods after shut down 9 of them have seen the market not go higher. Negotiations with China are important because if they reach a trade agreement it will have a big impact on markets. Fourth quarter earnings reports from the S&P are expected to be up 12%.
Unknown
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Seasonal Investing. The best time for seasonal investing is the 3 weeks starting in mid-December. That is the strongest time for the S&P 500 and the TSE. During the last 27 periods, the TSE Composite has gone up 23 times with an average gain of 2.4%. That period is the end of tax loss selling pressures. There is also diminished institutional activity where companies close operations in the middle of December.

Unknown
COMMENT

Typically, the stock does very well when there is greater demand for iron ore, and typically does well when steel stocks are doing well. This has recently broken its key resistance and has a longer-term upward trend. The technicals are certainly positive.

Financial Services
COMMENT

Historically US financial stocks have done very well from approximately January through until April of each year. The chart shows a nice upward trend and the stock recently broke to new highs.

investment companies / funds
COMMENT

Technically, this has a pretty good chart. The stock recently broke out above its trading range, so it is definitely in an upward trend. Relative strength is also a positive. Seasonally, we are just entering into the period of seasonal strength. It looks like it is going to go higher both technically and seasonally in the next 3-4 months.

banks
COMMENT

This just broke out to an all-time high. Canadian bank stocks have very distinct seasonality. Historically they have gone up as you get close to the end of the year. Normally they peak around the end of December. This year we have had an extension which has taken it into a higher level and an all-time high. Stocks like this, once they get into a new year, have a tendency to have an underperformance in the new year, the beginning of January through to the end of March.

banks
HOLD

This has been in an upward trend, but struggled a little recently, and has been underperforming the market. It's in a trading range of between $67.50 and $80. If you own this, you should probably continue to hold it. If it breaks below its support level of around $67.50, that would complete a double top pattern. If it moves above its previous high, of about $78, that would be quite encouraging.

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How do you use Bollinger bands? Bollinger bands give you a range for a security to trade within 2 standard deviations. Most stocks will trade within those bands over a long period of time. This stock is an interesting one because, for a long period of time, it has been coming way down. Bollinger bands have been getting tighter and tighter and then, all of a sudden the news came out that they were going to reduce production and uranium oxide immediately went up 15%. Using Bollinger bands can be very useful except when there is specific news that comes out on a company like this, which can have a significant impact. Seasonally, it has done very well from November right through until April of each year. It hasn't done that for the last few years. This year, we might have something going for us, and it looks like the stock could expand beyond its Bollinger bands for a period of time.

Unknown
COMMENT

This has very strong seasonality. It normally starts around the end of January, and moves through until springtime. It’s been in a trading range for the last couple of weeks, and will probably be there for another 2-3 weeks until about the middle of January. That will be the time for an opportunity.

specialty stores
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