Trader View from Toronto: Global Equities on Up-Trend

06/30/2017 2:51 am EST

Focus: STRATEGIES

Ziad Jasani

Managing Director and Partner, Independent Investor Institute

A defensive posture is the highest probability decision with long-term capital. And playing short-term moves in Energy, Technology, Mining with risk capital only, asserts Ziad Jasani, of the Independent Investor Institute, Toronto, in his weekly Trader video.

Swing Trade Structure: Global equity markets remain on up-trend formations from February 2016, and have broken/limped out to new all-time highs June 1 -2.

While US equities pushed out to new all-time highs (SP500 2,446) on June 9 but closed back under. A retrace to January 2016 primary trend line, -3.75% away for world iShares MSCI ACWI Index ETF (ACWI) is a more likely outcome versus new highs sustaining. But a bounce is expected.

With markets stretched to extremes a correction (-10% to -15%) is plausible, especially if the US Fed keeps their current path of hikes (1 more in 2017) while US economic data softens (slower growth).

We see the globe represented by ACWI now neutral on annual routines, with higher odds for a move back up towards $66.73 this week (+1.82%). This implies that the bulls attempt a limp-out to new highs on the S&P 500, and take the TSX back above its 15,400-360.

The S&P 500, Russell 2K and S&P/TSX Composite Index (TSX) present as the most relatively cheap spots that are trade-able for a limp-out to new highs IF the S&P 500 is able to close above 2,446 and the TSX is able to hold above 15,400-360.

We see under-performance risks for the following trading blocs in the mid-term (weeks to months): TSX, Nasdaq, Dow, Russell 2K and shorter-term the Eurozone SPDR DJ Euro STOXX 50 ETF (FEZ).

Under-performance from the Russell 2K since the beginning of 2017 is a “tell” that all is not well with Trumphoria or the domestic growth outlook.

Currently, a defensive posture is the highest probability decision with long-term capital. And playing short-term moves in Energy, Technology, Mining with risk capital only.

View the latest videos from Ziad Jasani of the Independent Investor Institute here

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