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00:00:00Good morning, everyone, and welcome to
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00:00:02Tuesday morning, the first trading day of 2024.
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00:00:06In the pre market this morning, stock
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00:00:07index futures are trading below fair value.
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00:00:10Dow futures currently down just under 200 points, while commodities are higher.
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00:00:15According to Bloomberg, the TSX 60 is trading down $4 and change right now.
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00:00:20We closed up over $2 and change on Friday,
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00:00:24so not looking for any major damage to the TSX on Tuesday morning.
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00:00:30Now, in today's presentation, we'll start
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00:00:32off the year with a quick recap of what happened in 2023.
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00:00:35And the TSX did end the year higher.
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00:00:39Most of the gains came in the last nine weeks, and I'll just hold my mouse there,
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00:00:44but the TSX ended up 8.12%. Compare that to the Nasdaq, which was up over 50%.
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00:00:50And it was really not a very productive year for the TSX.
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00:00:55Most of the gains came when the VIX reversed and generated a sell signal.
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00:00:59And the VIX, or the Fear Index, is something we watch very closely.
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00:01:03When the VIX is trending lower, we want to be bullish on the market.
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00:01:07When it's trending higher, we want to be bearish on the market.
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00:01:10And right now, it's really stopped trending over the last couple of weeks.
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00:01:14So we're still on a weekly sell signal that should be bullish for the market.
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00:01:18But we're not expecting the market to go much higher from here at the present time.
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00:01:24Now, it was a very mixed market.
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00:01:26There was only 126 stocks on the TSX Composite that ended the year higher.
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00:01:3198 were unchanged or lower.
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00:01:33So getting pretty close to 50% of the
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00:01:36stocks on the TSX composite did not do well last year.
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00:01:41Now, the focus was in the US.
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00:01:43They called it the Magnificent Seven.
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00:01:45We added Shopify to that list for our
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00:01:48Magnificent Eight, and that's where most of the gains came from.
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00:01:51And those gains were also seen in Canada,
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00:01:54where the infotech sector was up over 55% on the year, being led higher by Celestica
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00:02:00on the TSX Composite and Shopify on the TSX 60.
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00:02:05And we also saw Constellation Software up over 50% on the year.
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00:02:09So that's where most of those gains came from.
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00:02:11Now, the biggest and most important sector
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00:02:13of the canadian stock market, of course, is the financials.
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00:02:16And the financials ended the year pretty close to the gains that we saw from the
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00:02:20TSX heading up towards the highs of early 2023.
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00:02:23And again, we made most of our gains in the last nine weeks of the year.
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00:02:29At the same time, a couple of the major banks ended the year underwater, and those
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00:02:33were the bank of Nova Scotia and the TD bank.
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00:02:36And probably the best stock in Canada and
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00:02:39the Berkshire Hathaway of Canada is Fairfax, which ended the year up over 50%.
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00:02:44So if you have to have one stock in your
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00:02:47portfolio for a long term investment, it's probably going to be Fairfax.
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00:02:51Now, the marijuana sector was the biggest
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00:02:53loser, and of course, the TSX itself has taken away the index, and so people aren't
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00:02:58thinking about this sector as much as they used to.
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00:03:01We're looking at the Horizons
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00:03:03Marijuana Life ETF, which was down over 20%.
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00:03:06You can see when Bay street gave up on this sector back here in early 2021, and
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00:03:12we're not expecting it to come back to those levels.
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00:03:14If you are playing this sector, there's still opportunities here.
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00:03:17It's certainly tradable, but your playing
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00:03:19field has to be the highs from 2023 and the lows of 2022.
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00:03:24That's basically your playing field.
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00:03:25You don't want to be having targets above
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00:03:27that level because they're very unrealistic.
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00:03:30The whole dynamics of this particular sector has changed and you have to deal
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00:03:34with being more realistic about your opportunities in this sector.
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00:03:38But certainly there's the possibility of
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00:03:4010, 20, 30 or 40% gains in this sector if it's going to trend higher in 2024.
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00:03:47Now, looking at commodities starting with
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00:03:50gold, gold is on a buy signal right now heading up, and it's in a range between
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00:03:561875 at the lower end of the range and 2125 at the higher end of the range.
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00:04:01And we're above the midpoint at the moment, so that's looking pretty bullish.
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00:04:05Unfortunately, gold stocks are not totally in sync with the price of gold and they
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00:04:10ended the year up 2.36%. The biggest winner from the major gold stocks we
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00:04:15follow, ElDorado, was up over 50% on the year.
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00:04:19Looking at the energy sector.
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00:04:20Well, crude oil ended the year basically unchanged.
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00:04:23Natural gas underwater and energy stocks
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00:04:26as a whole were down nearly 1% on the year.
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00:04:30The biggest winner in the energy sector was Athabasca.
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00:04:32The biggest loser was Birchcliffe for the year.
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00:04:36Now, if we're going to buy low and sell high, one of the indicators we can look at
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00:04:40is the percentage of stocks currently trading above x.
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00:04:43And if we look at the percentage of stocks
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00:04:45currently trading above the 50 day moving average, you can see we're up at the top
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00:04:48of the range here, and so we're looking at high risk opportunities.
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00:04:52If you want to chase stocks up here, if
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00:04:53there's new buy signals you're taking on high risk.
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00:04:56This is the time and place.
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00:04:57We want to be looking for sell signals and shorting opportunities and to buy puts,
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00:05:02depending on which market you're looking at.
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00:05:04And you can see down at the bottom when the percentage of stocks currently trading
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00:05:08above their 50 day moving average gets down near the 20 and below.
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00:05:12That's when we look for low risk buying opportunities.
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00:05:16And so coming into January, we're at the high risk end of the range and looking for
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00:05:22the market to pull back here into the month of January.
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00:05:25When we look at the seasonality chart, we look for a tradable high in September.
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00:05:30We look for lows in October, and then we look for a year end rally.
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00:05:34And that's what we got.
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00:05:35Last nine weeks did pretty well.
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00:05:38And coming into January, it's usually
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00:05:40negative for the canadian stock market with a rise into February.
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00:05:44And of course, February gives us RRSP seasons where people make
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00:05:49put deposits in, and it's usually in low risk opportunities.
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00:05:53You're talking to your bank teller, of
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00:05:54course they want to sell you the bank's etfs.
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00:05:57And those etfs, of course, include bank stocks.
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00:06:01So we usually get a nice buying
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00:06:04opportunity into the end of February and then a pullback into March.
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00:06:09So that's what we're expecting to happen.
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00:06:11Of course, we're going to watch the market
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00:06:13and see which way the market wants to go in 2024.
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00:06:17Okay, folks, that is all for this morning's presentation.
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00:06:19We're looking for some selling at the open on Tuesday morning.
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00:06:23Have a great day.
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00:06:24Next time you'll hear my voice is on Wednesday morning.