Jeff Parent, chief investment officer at Castlemoore
FOCUS: Technical analysis
Top Picks: South Bow, Atlassian, Wolverine Worldwide
MARKET OUTLOOK:
Market divergences abound this year. Comparing U.S. to international markets, they are far apart with U.S. gaining 25 per cent (S&P 500 Index) and the international indexes up between five to 10 per cent. Digging a little deeper within the U.S., the top 10 largest companies are up a market-weighted 35 per cent versus an equal-weighted S&P 500 Index 15 per cent gain.
Equity money managers are struggling to beat their benchmarks. Outside of the volatile precious metals funds, the best performers are almost certain to have large holdings in Nvidia and Meta. This puts a lot of pressure on others to buy into the hype, thereby extending the gains in the big names. Essentially, the markets are becoming more one-sided. This is great for a while. Can it continue? Probably not. For now, we continue to be close to fully invested with higher-than-average exposure to the U.S. markets (and U.S. dollar). When such one-sided markets unwind, like they did in 2000 and 2008, the downturn can be painful. The set-up for a reversal hasn’t begun to develop. We’re watching for it very carefully.
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TOP PICKS:
South Bow (SOBO TSX)
A recent pipeline spinoff from TC Energy, paying a very good dividend that looks stable, with U.S. exposure. The chart doesn’t have any history, but there has been steady buying which could continue.
Atlassian (TEAM NASD)
Interesting collaboration software with good growth potential. OK to take on a small position and build but sell below $230.
Wolverine Worldwide (WWW NYSE)
Attracted by the strong earnings report. This shoe company can add diversification to a portfolio. Want to be out below $18.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| SOBO TSX | N | N | N |
| TEAM NASD | N | N | N |
| WWW NYSE | N | N | N |
PAST PICKS: JUNE 24, 2024
Altagas (ALA TSX)
- Then: $30.48
- Now: $35.30
- Return: 16%
- Total Return: 17%
Microsoft (MSFT NASD)
- Then: US$447.67
- Now: US$414.39
- Return: -7%
- Total Return: -7%
Mueller Water Products (MWA NYSE)
- Then: US$17.61
- Now: US$25.10
- Return: 42%
- Total Return: 43%
Total Return Average: 18%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ALA TSX | Y | N | Y |
| MSFT NASD | Y | N | Y |
| MWA NYSE | Y | N | Y |