Javed Mirza, analyst, Canaccord Genuity

FOCUS: Technical analysis

MARKET OUTLOOK:

Our work shows that a new short-term (two to four week) equity market rally phase is attempting to get underway, and we believe this would be confirmed by a breakout above the April highs on the S&P 500, TSX Composite Index, and the Russell 2000. The Nasdaq 100 closed above the April highs last Friday, which strongly suggests the S&P 500, TSX Composite, and the Russell 2000 are likely to follow suit.

A close above the April highs would target important technical resistance near the August highs on the S&P 500 ~4,305, or another 4.1 per cent upside from current levels. We recently recommended that clients utilize near-term equity market weakness as an opportunity to add exposure for the next short-term rally phase, which we believe has upside, by time, into May.

Over the intermediate-term (two-four months), we remain extremely bullish on equity markets as our technical work strongly suggests that equity markets are almost seven months into a new four-year cycle (three-five-year cyclical bull market). Improving price momentum and strengthening market breadth in conjunction with bearish investor sentiment and the CBOE put/call ratio near neutral levels continue to support further upside in the ongoing equity market rally.

If you have watched past segments, you will know that we are calling this new four-year cycle the higher for longer cycle, as our technical work suggests that both interest rates and inflation will remain higher and be in place for much longer than most market participants anticipate. The recent breakout above the December highs by the S&P 500 and TSX Composite confirms a series of higher highs and higher lows are in place since the major market low on October 13.

The “boring middle” describes ongoing sector rotation that would ultimately lead equity markets higher for the current HFL cycle into H2 2025 / H1 2026.

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TOP PICKS

iA Financia (IAG TSX)

TMX Group (X TSX)

Cameco (CCO TSX)

Past stocks he's watching | March 9, 2023

National Bank of Canada (NA TSX)

• Then: $102.43
• Now: $100.63
• Return: -2%
• Total Return: -1%

West Fraser Timber (WFG TSX)

• Then: $103.03
• Now: $103.12
• Return: 0.1%
• Total Return: 0.5%

Stantec (STN TSX)

• Then: $79.71
• Now: $100.48
• Return: -2%
• Total Return: -2%

Total Return Average: 1%