Keith Richards, president and chief portfolio manager, ValueTrend Wealth Management

FOCUS: Technical analysis

MARKET OUTLOOK:

Look at the S&P 500, and you’ll note that it’s stalling around the last peak in the downtrend that began in July. In order for the recent rally to prove “the real deal,” we need to see that peak, which is roughly 4380, taken out. It then needs to stay above that level for several days to prove a valid breakout. The market also needs to remain above its 200-day moving average. A breakout through the last peak (4380 for the SPX) and a move above the 200-day simple moving average is evidence of a “real deal recovery.”

We’ve been holding 30 per cent cash all summer, which helped us experience much less than half the downside. We recently reduced that cash to 24 per cent after witnessing the S&P 500 break above its 200 day moving average. A break through 4380 (last peak) on the SPX will inspire us to reduce cash more aggressively and buy more stocks.

At ValueTrend, we always move into or out of stocks in “legs.” We’ll invest our cash as the factors in our system such as positive breadth and sentiment signals suggest a sustainable bull market.

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TOP PICKS:

Consumer Staples Select Sector SPDR Fund (XLP NYSEARCA)

Physical Platinum Shares ETF (PPLT NYSEARCA)

Enbridge (ENB TSX)

Past Picks: October 10, 2023

Johnson & Johnson (JNJ NYSE)

• Then: US$158.36
• Now: US$146.87
• Return: -7%
• Total Return: -7%

Nutrien (NTR TSX)

• Then: $84.13
• Now: $74.10
• Return: -12%
• Total Return: -12%

Horizons High Interest Savings ETF (CASH TSX)

• Then: $50.07
• Now: $50.09
• Return: 0%
• Total Return: 0.5%

Total Return Average: -6%