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

What is the best way to place stop losses in the market today? Those two words together makes his blood boil. He doesn’t let the market dictate the price at which he sells.

Market. Last week the S&P and markets around the world fell off and today we saw them buying the dip. This is normal and we have not broken any trend lines. This is nothing to be concerned with. This is a buying opportunity. A correction has been overdue for a long time. It will happen at some point but you cannot say when. We are seeing strong corporate earnings helping to keep the stock market going. He prefers the US for investing right now. He is not a big fan of the Canadian banks right now. The energy sector and gold miners are being hit.

Fixed Income ETF, US or Canadian recommendation. Bond yields are picking up so bond prices are going down. He would be cautious right now on these.

World Debt – how does it affect gold? Debt should help gold but we have not see huge moves yet. We have seen an ascending triangle in gold since mid-2016. People are starting to step in. It is really hard to time this.

Educational Segment. What The US 10 Year Bond Market says about the Economy. When the yield rises it becomes more expensive to borrow and cuts down on growth. Both the S&P and Bond yields have been going up rapidly recently, which is not normal. Now investors are concerned the bond yield moved up too far too fast. We have to be cautious here.

Market. Alberta is considered a third world country now at this point by CEOs. It will eventually come back but right now you have to be specific in what you invest in. Government has created uncertainty with carbon tax and new regulations. There are opportunities in that people have been out of the Canadian energy for so long and are starting to come back.

[The guest was on last in 2014 and was working for a different company so there were no Past Picks today.]

US Oil Capacity. We just broke through 10 million barrels. It is easier to get American barrels out where as in Canada we are stuck getting the oil out.

We have not seen any M&A in the energy space. As stocks continue to see stocks valued quite low, we may start to see M&A and this would be a signal of health in the sector.

Market. Last Monday he warned that the markets were setting up for a correction. S&P just blew through his first level of support at 2700, will probably go down to 2500. The market broke 2700, retraced back to it, but automated program trading was probably the reason the market dropped again to 2650. The 5-year chart for the DOW shows a rising trend with an upward arc off the trend over the past 6 months. He calls that a parabolic move (called a “hockey stick formation”). This kind of trend doesn’t last. The parabolic move is an overbought indicator and the correction brings the market back to the underlying trend. Technical analysts use momentum indicators. One is called RSI, which showed the market as mega-overbought. The market was 12.5% over its 200-day moving average last Many. Historically, the market does not continue to be 10% or more above its 200-day average; it corrects. The market is likely to come back down to take out this excess and then be over and done with the correction within the next couple of weeks. This was a healthy correction. Getting it out of the way now is better than waiting and seeing something worse later. A 4.5% drop is significant, but it is not one of the 25 most significant declines. It is just a corrective day. Dropping to 2500 will bring the RSI back to normal levels and will probably bring a lot of buyers in.

TSX. He pays little attention to the TSX because it is concentrated in three sectors, banks, materials and oils. The chart shows a lid in the mid-1500’s, it is now penetrating that lid and if it stays above it for a little longer, it is likely to rally further.

Relative Strength Index. RSI looks back -- the default lookback period is 14 days. Compare its velocity over these days. If velocity moves too aggressively, and goes over 70, it is overbought. RSI of 70 or 80 is overbought. The RSI recently was over 90. His favorite indicator is the 200-day moving average, which shows the long-term trend. If the 200-day moving average is intact, you’ve got to be long the market. The other indicator he described was a breadth indicator. If more stocks are trading below the 50-day moving average than above, even though the market is still rising, this shows that the rise is supported by less participation on the upside.

Silver. Silver has been in doldrums for past 2 years. Even though silver might rise seasonally at this time, its trend looks negative and so there might not be a seasonal rise this year. Gold has also not broken out and silver will probably not break out before that. Doesn’t own gold or silver.

Today's sell-off. In late-December, the last time he was on Market Call, he said he was a reluctant bull. Now, he's waiting for even more than a pullback. Many reasons for a strong economy, including great monetary stimulus, but enough is enough. It's priced in. We had a great January and the market's been up the past 23 months. But now it's harder and harder to find good ideas. When he can't find a great idea, he goes, Wait a second... No one can predict a top, but he looks for things like Texas Instruments where they had a good quarter, but the stock still goes down. We're close to a top. Wants to see a pullback.

Crypto and cannabis selling off in tandem this week No real reason for correlated sell-off. Coincidence? Not areas he invests in. Prefers companies with cash flow and return on invested capital.