Today, The Panic-Proof Portfolio (Stockchase Research) and The Weekly Buzzing Stocks by Billy Kawasaki commented about whether CL-N, SOFI-Q, AR-N, GWO.PR.P-T, CIU.PR.A-T, CCS.PR.C-T are stocks to buy or sell.
Seasonality matters. In his recent newsletter, he contrasted two reasons why the market might go up, and two reasons why it might go down.
July is OK seasonally, and momentum is still with the market. However, some of the underlying indicators are kind of weak. Like Kevin O'Leary wearing a suit blazer with pyjama bottoms, the market looks good up top, but not so good when you look below the surface.
There's always a bit of pumping coming into an election, where they promise the world. That can have an effect on the markets. Typically, election years often see positives in the back half of the year.
But he has a problem with market breadth and overbought status (how much above the 200-day MA the S&P is). He likes the indexes that are a little less technology focused.
He likes the indexes that are a little less technology focused, and he's 98% not tech in his equity platform. And yes, he might underperform for a while, and this will continue as long as it's all about MSFT and NVDA. He doesn't like the market from a momentum point of view, it's overbought, but you can't argue with it too much so you have to be invested.
He's compared the breadth stats between now and 2000-2001, and the two market participation numbers are at about the same level. The usual suspects were moving up, and nothing else was. We're in the same sort of situation. Everyone knows what happened, it imploded.
He's not saying it will implode tomorrow. But the setup is perfect, it's going to happen, unless things slow down for that handful of leading stocks.
It very well could happen. Right now, though, the focus is so much on those stocks. Everybody's aware that they're overbought, yet everyone's still buying them partially because of FOMO. When that changes, the other stocks will catch up, which is why he's in non-tech stocks. The change will happen eventually, so it's safer to be there now, even if he suffers a few months of underperformance.
With the expectation that central banks are no longer increasing interest rates, preferred shares should benefit. We reiterate CCS.PR.C as a TOP PICK. CCS has served the Canadian market for 78 years operating as a multi-line insurance cooperative. We continue to recommend a stop at $17, looking to achieve its par value of $25 -- upside potential over 29%. Yield 6.5%