Video View from Toronto: Watch for S&P 500, TSX Gaining Foothold
02/13/2018 10:29 am EST
With indicators continuing to print bullish, we simply need US CPI data to miss consensus and allow Equities to continue the bounce, as Bond yields and the USD soften up. More from Ziad Jasani of the Independent Investor Institute, writing and videocasting on Monday.
The S&P 500 has corrected -11.84% from the Jan. 26, 2018 all-time-highs of 2,873 to intra-day lows on Friday, Feb. 9 (2,532.69).
The TSX just missed a correction declining -9.96%. With economic and earnings indicators continuing to print bullish, we simply need US CPI data to miss consensus and allow Equities to continue the bounce, as Bond yields and the USD soften up.
• Based on relative positioning the S&P 500 and most of the US market would likely under-perform ETFs priced in USD that track the World-Ex-US (ACWX, EFA, FEZ, EEM, FXI), or hedged Canadian dollar denominated ETFs that do the same.
• We would expect lead out-performance from Precious Metals (GLD, SLV, GDX, SIL), Materials (XLB, XME, LIT), Oil & Energy (HOD-T, USO, XEG-T, ZEO-T, XLE, RYE, XOP, HNU-T, UNG), the TSX (XIC-T), and trained momentum spaces, namely Nasdaq/Technology (QQQ, XLK, IYW), HealthCare (XLV, XBI, XPH), Discretionaries (XLY), Industrials (XLI), Cannabis (HMMJ-T)
• Defensive sectors would also come-along-for-the-ride: TLT, JNK, AGG, BND, BNDX, XBBT, CPD-T, PFF, XLU, XLP, XLRE, VNQ, IYZ, XSTT, BCE-T, XRE-T, ZUT-T.
While the S&P 500 remains above 2,609 and TSX above 15,025 ahead of Wednesday, Feb. 14, the bounce is intact. We remain net long with tighter stops as the unknown (also known as event-risk) presents on Feb. 14 with US CPI data.
If the S&P 500 gains a foothold of 2,664-2,652 and TSX 15,400-360 (currently resistance) after the data release, we are looking to add significantly to everything picked up on Friday, Feb. 9 and the aforementioned spaces.
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