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COMMENT
COMMENT
December 28, 2018
Market Outlook He thinks the washout lows of December are now oversold. He expects a full rebound into March and perhaps into September or longer. An inverted yield curve typically results in a market rally for nine more months. The trade overhang issues will continue, particularly on the technology side. He expects patent battles with China to continue. On a 200 day moving average basis only 11% of US stocks were trading above the long term average -- similar to 2011 and 2016. This has resulted in PE ratios becoming much more reasonable. He has 6 "okay to buy" dividend strategy stocks right now -- so he is waiting for the all clear signal to come.
General Market Comment
December 28, 2018
Market Outlook He thinks the washout lows of December are now oversold. He expects a full rebound into March and perhaps into September or longer. An inverted yield curve typically results in a market rally for nine more months. The trade overhang issues will continue, particularly on the technology side. He expects patent battles with China to continue. On a 200 day moving average basis only 11% of US stocks were trading above the long term average -- similar to 2011 and 2016. This has resulted in PE ratios becoming much more reasonable. He has 6 "okay to buy" dividend strategy stocks right now -- so he is waiting for the all clear signal to come.
Robert McWhirter
President, Selective Asset Management
COMMENT
COMMENT
December 28, 2018
Dividend trading strategy You must look at a company's trailing four quarter payout ratio. If it is less than 75%, it is a buy. If it is above 100%, then it is a sell as the dividend is not likely sustainable. The earnings growth is also important to be able to sustain the growth. This generally results in his picks averaging less than the market average yield.
General Market Comment
December 28, 2018
Dividend trading strategy You must look at a company's trailing four quarter payout ratio. If it is less than 75%, it is a buy. If it is above 100%, then it is a sell as the dividend is not likely sustainable. The earnings growth is also important to be able to sustain the growth. This generally results in his picks averaging less than the market average yield.
Robert McWhirter
President, Selective Asset Management
COMMENT
COMMENT
December 28, 2018
Canadian dollar outlook. He thinks the Canadian dollar is likely headed lower -- based on recent technical analysis. It is usually a reflection of what is going on in the country -- with oil prices looking weak, he is not bullish. He is not expecting the Notley government's production constraints for January to have much of an impact on the dollar.
General Market Comment
December 28, 2018
Canadian dollar outlook. He thinks the Canadian dollar is likely headed lower -- based on recent technical analysis. It is usually a reflection of what is going on in the country -- with oil prices looking weak, he is not bullish. He is not expecting the Notley government's production constraints for January to have much of an impact on the dollar.
Robert McWhirter
President, Selective Asset Management
COMMENT
COMMENT
December 28, 2018
Where are the markets going from here? Major 4-year bottom cycle in 2016. In October, there was a standard pullback. At first, they called it a "holiday sale." But the technical damage was severe, a 4-year cycle reset, a business cycle contraction. So 6-9 months from now, there will be economic weakness. We're in the process of starting a new 4-year cycle. On average, the 4-year cycle pullbacks were 15%, and they lasted 34 weeks. If we hit either goalpost, he'd look to add to equities. This is not the start of a new bear market. From 2000-2010 was a secular bear market, where the price damage was around 34% and the duration was also extended. Current cycle sets us up for another 2-3 years of upside.
General Market Comment
December 28, 2018
Where are the markets going from here? Major 4-year bottom cycle in 2016. In October, there was a standard pullback. At first, they called it a "holiday sale." But the technical damage was severe, a 4-year cycle reset, a business cycle contraction. So 6-9 months from now, there will be economic weakness. We're in the process of starting a new 4-year cycle. On average, the 4-year cycle pullbacks were 15%, and they lasted 34 weeks. If we hit either goalpost, he'd look to add to equities. This is not the start of a new bear market. From 2000-2010 was a secular bear market, where the price damage was around 34% and the duration was also extended. Current cycle sets us up for another 2-3 years of upside.
Javed Mirza
Technical analyst, Canaccord Genuity
COMMENT
COMMENT
December 28, 2018
Gold longer term. "Intermediate term" is 3-6 months. Right now, we're in a commodity bear market. Whereas between 2000-2010, we were in a commodity bull market while in a secular bear market in equities. So commodities were bid up more than stocks. The next commodity bull cycle should be around 2028-29. In the next few years, gold will underperform equities, but there will be periods when it will be great to hold. Three factors caused him to be bullish on gold in August/September: seasonality, low valuation, and commercial hedgers were long. It could get more dicey in the near term.
General Market Comment
December 28, 2018
Gold longer term. "Intermediate term" is 3-6 months. Right now, we're in a commodity bear market. Whereas between 2000-2010, we were in a commodity bull market while in a secular bear market in equities. So commodities were bid up more than stocks. The next commodity bull cycle should be around 2028-29. In the next few years, gold will underperform equities, but there will be periods when it will be great to hold. Three factors caused him to be bullish on gold in August/September: seasonality, low valuation, and commercial hedgers were long. It could get more dicey in the near term.
Javed Mirza
Technical analyst, Canaccord Genuity
COMMENT
COMMENT
December 28, 2018
Healthcare sector for the long term. Managers rotated to it as a place to hide when the market was volatile. If it's paying a strong dividend, no reason to sell. Especially with the 4-year cycle reset coming up. There will be a rotation out of defensives and back into cyclicals, so don't sell at the lows. There's more upside to come. Has a long-term, stable uptrend.
General Market Comment
December 28, 2018
Healthcare sector for the long term. Managers rotated to it as a place to hide when the market was volatile. If it's paying a strong dividend, no reason to sell. Especially with the 4-year cycle reset coming up. There will be a rotation out of defensives and back into cyclicals, so don't sell at the lows. There's more upside to come. Has a long-term, stable uptrend.
Javed Mirza
Technical analyst, Canaccord Genuity
COMMENT
COMMENT
December 28, 2018
Copper. This is one of the canaries in the coalmine. If the 4-year cycle reset does take hold, copper should hold in. We're getting close to a critical level. So if we go below the lows, the next major support level will be $2.50. And if we go below that level, then something bigger might be happening, and the 4-year cycle reset may not be coming up.
General Market Comment
December 28, 2018
Copper. This is one of the canaries in the coalmine. If the 4-year cycle reset does take hold, copper should hold in. We're getting close to a critical level. So if we go below the lows, the next major support level will be $2.50. And if we go below that level, then something bigger might be happening, and the 4-year cycle reset may not be coming up.
Javed Mirza
Technical analyst, Canaccord Genuity