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

Market. Happy with days like today where there was a bounce. The recent sell-off and volatility weren't a surprise given the outstanding January. Fundamentals, like earnings trending up, remain strong though there's still a question of interest rates. Keen on IT stocks, seeing value, and still positive on Canadian oil, expecting positive reports coming down the pipe.

Canadian oil service companies. The big question is where can these companies deploy their rigs? Canadians don't have the opportunity to get the oil out, compared to their American companies. Any company that focuses on the U.S. will have better results. Given oil prices now and the spreads, there could be trouble ahead for the Canadians. It comes to getting our products out as well as a sustainable price, and he believes these will happen in the next couple of years. Positive valuations.

Volatility. The pullback last week was not the start of a bear market because (a) global economy is improving and (b) corporate profits are growing. This is rarely the signal for a bear market. Rates in treasuries are still 2.85% compared to normal levels around 4%. It is important to watch them, but they are not a concern at this time. The spike in volatility triggered selling from funds focused on low volatility, as they sold off, stop-loss orders were triggered as well--this is not an indication of an underlying fundamental problem in the market. She is now looking at stocks whose valuations have improved. It’s growing, trends are in its favor.

U.S. and Canadian corporate profits could hit a record high this year. World economic growth is the the highest he's seen in 10 years. We had ridiculously low volatility for the last 18 months until recently. So now we've returned to normality. As Warren Buffet says, "When the tide goes out, you find out who's swimming without a bathing suit," and "If you can't explain an idea to an intelligent eight-year-old, then probably it's a bad idea." Canada has been a dismal returning market, going nowhere for the past 10 years in the broad index. However, we have good quality banks trading at less than 11x earnings, high-yielding utilities and telecoms with growing dividends. These are opportunities. High-yield stocks are historically where you make your money in expensive markets. (Advice to Minister Morneau who's about to unveil the budget?) If he's spending time with doctors and lawyers, get a bulletproof vest. These people are terrified that their entire financial structure will crash, including retirement planning. Canada is in a boom time. The Liberals haven't got the message that we don't need fiscal stimulus. Cut the spending and don't look for more tax revenue.

S&P 500. Fears another plunge in the market. Is it time to jump in? Yes, he would. Earnings expectations continue to rise 10% premium to where it stands now. Add a dividend yield of a couple percent and you're not bad. End of 2018 guesses 2,800-2,850. Rising 10% and earnings are still reasonable.

Market. Last week was quite challenging. One of the tests for are we over sold enough for the bottom is the McClelland Oscillator. We had two lows last year and one this year and they have historically marked bottoms. We tested the 200 day moving average on Friday and a couple of times it held very nicely. We have to make higher highs in the future. If we don’t take out the highs from January over the next couple of months it means the bears are in control. We can trade the market on the rally.

Balance. Bonds and stocks have sold off at the same time recently. Equities have much more volatility than bonds so you need both to reduce overall risk. How much of each depends on your needs and your tolerance of risks. Equities may continue to be soft while bonds may rally.

He likes actively managed strategies in the preferreds. They can go to reset preferreds or to fixed preferreds if there are risks depending on what he thinks interest rates are going to do.

Real Return ETF or Rate Rest Preferreds? Reset prefereds are a good way to play the rising rate environment. He would be buying these into dips.

Educational Segment. Last week was quit challenging. The average correction is 5% or more. It was 13% last week. We are seeing an oversold condition on the broad market and a bottom. We tested the 200 day moving average. It is typically a good buying opportunity when it happens in a rising market. If we get above the interim high it will go up but if we don’t take out the highs of last month the bears will win out. He thinks you can trade the market on a rally.

Market. In January he was looking for weakness and was expecting oil to get hurt. Last week we had a blow out number. Natural Gas liquids also went up. It was a shocking number. The price of crude backed off on Friday. He is bearish on oil and bullish on natural gas. People don’t realize that most people heat with natural gas. People are not taking into account storage. Mother nature has the ability to eat into storage. It has had a bigger draw down than in prior years. February and March may have a big draw down in storage. Then the play is whether they can rebuild storage during the summer with the air conditioning season. He is predicting $4 for Nat Gas.

Market. Volatilty isn't over after a couple of really wild weeks. Don't blame ETFs or short-sellers. There were so many factors. It's bounced a little but hasn't returned to previous highs. Dow 50-week moving average of 22,500 has got to do some work to return to earlier highs of 26,600. Expects it to go lower. To feel more confident, he would like to see markets consolidate, which is once you go higher you come back down and test previous levels from where it moved up. We haven't done that; we just drifted higher. Wants to see weeks or months of trading at a support level--we're far from 22,500. The old highs of 26,600 will become short-term resistance. Once it reaches that, it has to show him it will bouce above that.

S&P. Expect it to hit that low again? He doesn't expect last week to happen again. It was a blip. But it was the start of something that scares him a little. Could happen within six months. He finds it hard to buy something that's gone straight up without a down tick. Expects serious support slightly below 2,500, then spend some time there. Then, the next regroup will take it that much further.

Gold. Used to be a safe investment. Likes gold. $1,400 is a level that gold will struggle to break above. Needs to see gold break this level for multiple days or months to build his confidence.

Oil. Bullish or bearish? On the fence with crude around $60. Expects to see it in the low-$50s. Won't see oil stay at current levels based on recent levels. Doesn't see much upside.