Canadian Stock Market Trends 01022024

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Good morning, everyone, and welcome to
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Tuesday morning, the first trading day of 2024.
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In the pre market this morning, stock
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index futures are trading below fair value.
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Dow futures currently down just under 200 points, while commodities are higher.
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According to Bloomberg, the TSX 60 is trading down $4 and change right now.
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We closed up over $2 and change on Friday,
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so not looking for any major damage to the TSX on Tuesday morning.
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Now, in today's presentation, we'll start
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off the year with a quick recap of what happened in 2023.
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And the TSX did end the year higher.
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Most of the gains came in the last nine weeks, and I'll just hold my mouse there,
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but the TSX ended up 8.12%. Compare that to the Nasdaq, which was up over 50%.
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And it was really not a very productive year for the TSX.
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Most of the gains came when the VIX reversed and generated a sell signal.
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And the VIX, or the Fear Index, is something we watch very closely.
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When the VIX is trending lower, we want to be bullish on the market.
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When it's trending higher, we want to be bearish on the market.
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And right now, it's really stopped trending over the last couple of weeks.
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So we're still on a weekly sell signal that should be bullish for the market.
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But we're not expecting the market to go much higher from here at the present time.
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Now, it was a very mixed market.
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There was only 126 stocks on the TSX Composite that ended the year higher.
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98 were unchanged or lower.
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So getting pretty close to 50% of the
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stocks on the TSX composite did not do well last year.
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Now, the focus was in the US.
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They called it the Magnificent Seven.
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We added Shopify to that list for our
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Magnificent Eight, and that's where most of the gains came from.
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And those gains were also seen in Canada,
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where the infotech sector was up over 55% on the year, being led higher by Celestica
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on the TSX Composite and Shopify on the TSX 60.
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And we also saw Constellation Software up over 50% on the year.
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So that's where most of those gains came from.
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Now, the biggest and most important sector
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of the canadian stock market, of course, is the financials.
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And the financials ended the year pretty close to the gains that we saw from the
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TSX heading up towards the highs of early 2023.
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And again, we made most of our gains in the last nine weeks of the year.
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At the same time, a couple of the major banks ended the year underwater, and those
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were the bank of Nova Scotia and the TD bank.
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And probably the best stock in Canada and
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the Berkshire Hathaway of Canada is Fairfax, which ended the year up over 50%.
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So if you have to have one stock in your
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portfolio for a long term investment, it's probably going to be Fairfax.
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Now, the marijuana sector was the biggest
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loser, and of course, the TSX itself has taken away the index, and so people aren't
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thinking about this sector as much as they used to.
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We're looking at the Horizons
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Marijuana Life ETF, which was down over 20%.
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You can see when Bay street gave up on this sector back here in early 2021, and
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we're not expecting it to come back to those levels.
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If you are playing this sector, there's still opportunities here.
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It's certainly tradable, but your playing
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field has to be the highs from 2023 and the lows of 2022.
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That's basically your playing field.
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You don't want to be having targets above
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that level because they're very unrealistic.
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The whole dynamics of this particular sector has changed and you have to deal
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with being more realistic about your opportunities in this sector.
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But certainly there's the possibility of
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10, 20, 30 or 40% gains in this sector if it's going to trend higher in 2024.
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Now, looking at commodities starting with
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gold, gold is on a buy signal right now heading up, and it's in a range between
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1875 at the lower end of the range and 2125 at the higher end of the range.
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And we're above the midpoint at the moment, so that's looking pretty bullish.
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Unfortunately, gold stocks are not totally in sync with the price of gold and they
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ended the year up 2.36%. The biggest winner from the major gold stocks we
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follow, ElDorado, was up over 50% on the year.
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Looking at the energy sector.
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Well, crude oil ended the year basically unchanged.
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Natural gas underwater and energy stocks
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as a whole were down nearly 1% on the year.
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The biggest winner in the energy sector was Athabasca.
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The biggest loser was Birchcliffe for the year.
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Now, if we're going to buy low and sell high, one of the indicators we can look at
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is the percentage of stocks currently trading above x.
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And if we look at the percentage of stocks
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currently trading above the 50 day moving average, you can see we're up at the top
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of the range here, and so we're looking at high risk opportunities.
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If you want to chase stocks up here, if
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there's new buy signals you're taking on high risk.
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This is the time and place.
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We want to be looking for sell signals and shorting opportunities and to buy puts,
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depending on which market you're looking at.
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And you can see down at the bottom when the percentage of stocks currently trading
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above their 50 day moving average gets down near the 20 and below.
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That's when we look for low risk buying opportunities.
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And so coming into January, we're at the high risk end of the range and looking for
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the market to pull back here into the month of January.
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When we look at the seasonality chart, we look for a tradable high in September.
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We look for lows in October, and then we look for a year end rally.
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And that's what we got.
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Last nine weeks did pretty well.
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And coming into January, it's usually
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negative for the canadian stock market with a rise into February.
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And of course, February gives us RRSP seasons where people make
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put deposits in, and it's usually in low risk opportunities.
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You're talking to your bank teller, of
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course they want to sell you the bank's etfs.
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And those etfs, of course, include bank stocks.
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So we usually get a nice buying
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opportunity into the end of February and then a pullback into March.
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So that's what we're expecting to happen.
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Of course, we're going to watch the market
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and see which way the market wants to go in 2024.
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Okay, folks, that is all for this morning's presentation.
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We're looking for some selling at the open on Tuesday morning.
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Have a great day.
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Next time you'll hear my voice is on Wednesday morning.

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