TMTA Theme Momentum Technical Analysis

Size: px

Start display at page:

Download "TMTA Theme Momentum Technical Analysis"

Cori Avice Murphy
6 years ago
Views:

1 February 14, 2016 Standing on the Precipice What an interesting time to start a blog on stock speculation! After a nasty start to 2016, we sit on the precipice of the 6 year trend and near term support levels on the S&P500. The monthly chart shows the uptrend is still in play - but definitely under pressure. Sideways and up is not out of the realm of possibility. However, the volume profile also indicates a quick drop to test the breakout level from 2013 cannot be ruled out. If we do get a trend break - it will likely be fast and furious - you'll either have some cash to put to work with, or you'll just have to sit on your hands and wait it out. My bias is to be engaged but conservative considering the length of this bull market and the fact that it was juiced with global Fed steroids. "The masses are asses" Or - when have the "masses" ever been right? Market tops tend to be extremely bullish times - everyone is making money, it's "too" easy to make money - and caution is thrown to the wind. Has anyone had an "easy" time making money in the last year or two? If this is THE top - this was the most hated market peak in modern financial history. And if you buy in to the idea that the average investor is always wrong - you want to note that AAII bullish sentiment is at extreme low levels. Look at this chart of the AAII investor sentiment since There is only one time in which investor sentiment and the market went in the same direction (green line) - a short period of time during the greatest bull markets in modern history.

2 The average investor is always wrong (AAII Sentiment readings since 1987) - investors largely disengaged during the great bull run in the late 80's leading up to investors pile into the market at the Dotcom top - investors entirely miss the run to the 07 peak (putting all their money into - housing!) - investors seem to be largely disengaged since the 09 bottom We can certainly go into a bear market here - but will it be a calamitous downfall? Can the average investor actually be right? Unlikely. Complexity The tectonic plates of the markets are shifting but nobody is quite sure yet what is causing it. There's plenty of speculation of course - it could have something to do with the crash in the Chinese stock market last summer or it could be the banks, particularly Europeans banks, overly exposed to crude and commodities - whatever the case it s scary enough to send fiat currency rushing back into the gold market.

It's fools game to overthink the situation and this minion of the interwebs is certainly not smart enough to figure it out, so I'm trying to keep things simple, stay engaged and be patient.

3 It's fools game to overthink the situation and this minion of the interwebs is certainly not smart enough to figure it out, so I'm trying to keep things simple, stay engaged and be patient. Our natural curiosity leads us to try and figure out complex situations, the bias toward complexity when it comes to investing is well documented. It's hard to make money in the markets - therefore, the thinking goes, the more complex the idea - the better the chance for a big return. The Confounding Bias for Investment Complexity illustrates that the complexity bias poses many problems for investors. You need to be aware of this bias when you're forming your investment decisions. READ ARTICLE At some point down the road we'll all find out what the real problem is in the markets - in the meantime - what to do? I don't see any reason to rush into investment decisions right now - but I do want to stay engaged in the market. Opportunities may be coming in gold, but I missed the first leg up and will wait for a pullback before investigating further. Energy is of interest and definitely worth watching for opportunity. I'm seeing some divergence in the price of crude and the TSX Energy Index. Notice that index making higher lows while the crude is making new lows. This could be a signal that market participants believe a bottom is in - or it could simply be the currency related - it's too early to tell. Recommendation: build yield opportunities into your portfolio Old people...keep getting older. Boomers need income and, in my opinion, they aren t going to be getting it from their savings accounts or GIC s anytime soon. So I m looking for high yielding stocks that are on sale.

4 Dividend 15 Split TSX:DF Rationale: the recent dividend cut has caused extreme market reaction - in this case the dividend gets cut on the common once the NAV goes under $ Last missed dividend was in Upon NAV returning back over $15 the dividend is reinstated ($0.10 per share = about a 30% yield at $3.95). The underlying tracks the highest quality blue chip stocks on the TSX such as the banks and insurance companies, BCE and ENB etc. Core Holdings Yield:~30% based on dividend reinstatement/ based on current $3.95 share price Entry Price: this is a very volatile stock right now as participants attempt to gauge how fast, or slow the dividend reinstatement will take. Try to get a position under $4.00 Stop: None - purchase 1/2 position now and add if we see another leg down. Risk: Time risk. It could take longer than 2008 before the NAV goes back over $15 and the dividend is reinstated. This portfolio represents the cream of the crop in Canada so unless you think the end of the world is near it seems like a reasonable risk reward scenario. It should pop to the $7.00 area as soon as the dividend looks like it will be reinstated. Buy for long term growth and dividend reinstatement.

5 Tech Achievers Growth & Income Fund TSX:HTA.UN Rationale: Tech stocks in general have been crushed lately and while the tech market was over-valued, it's also not the tech market of I like the technology sector long term for growth, but I don't want single stock exposure. This fund gives you exposure to the highest quality US tech stocks and uses an option strategy to deliver the yield. I like the managers, but the lack of track record for the dividend on this specific product is a risk factor to consider. I view this as a long term holding, so I'm willing to ride out near term volatility. Core Holdings Yield: ~10.5% Entry Price: try to get it below $ it's a thin trader Stop: None - this is a 1/2 position. If the markets have another leg down I would look to add. Risk: No track record means there is execution risk in term of maintaining the yield. Buy for long term growth and yield.

6 If you like the energy space right now - I like Ron's pick: Inter Pipeline Ltd. TSX:IPL Author Ownership Symbol FAMILY PERSONAL NONE TSX:DF TSX:HTA.UN The Author may, at any time, purchase positions, add to positions or dispose of existing positions without notice DISCLAIMER The Author hereby discloses that he may or may not directly or indirectly own some of the securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, TMTA Report (TMTA). The Author is not paid for mentioning any stocks listed on this blog. TMTA is an entertainment newsletter which, along with its related publications, website, and other services (collectively, the "Newsletter"), is offered free to the general public. Newsletter subscribers will receive the benefit of TMTA commentary, analysis, opinions, advice and recommendations. The Newsletter is impersonal and does not provide individualized advice or recommendations for any specific subscriber or portfolio.the Editor may directly or indirectly own the securities which are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the newsletter. Investing involves substantial risk. Neither the Editor, the publisher, nor any of their respective affiliates make any guarantee or other promise as to any results that may be obtained from using the Newsletter. While past performance may be analyzed in the Newsletter, past performance should not be considered indicative of future performance. No subscriber should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing the prospectus and other public filings of the issuer. To the maximum extent permitted by law, the Editor, the publisher and their respective affiliates disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations in the Newsletter prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.the Newsletter's commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Editor, and are subject to change at any time without notice.the information provided in the Newsletter is obtained from sources which the Editor believes to be reliable. However, the Editor has not independently verified or otherwise investigated all such information. Neither the Editor, the publisher, nor any of their respective affiliates guarantees the accuracy or completeness of any such information.

7 The Newsletter is not a solicitation or offer to buy or sell any securities. Subscribers may submit questions to the Editor by at TMTA Report. However, since the Newsletter is impersonal and does not provide individualized advice for specific subscribers, the Editor can only answer questions of a general nature about the markets or specific securities. The Editor will make every effort to answer subscriber questions on our website or in the pages of an upcoming issue of the Newsletter. Neither the Editor, the publisher, nor any of their respective affiliates is responsible for any errors or omissions in any Newsletter.

The Technical Portfolio

The Technical Portfolio Volume 18 Monthly Return Comparison Regular Portfolio +2.73% Aggressive Portfolio +2.68% S&P 500 +1.69% Dow Jones Industrial Average -0.13% Nasdaq Composite +2.89% Russell 2000-1.00% March 17, 2019 The