Colin Cieszynski, chief market strategist, SIA Wealth Management

FOCUS: Technical analysis

Top picks: Agnico Eagle, T-Mobile, BMO China Equity Index ETF

MARKET OUTLOOK:

Over the last several weeks, there has been a significant shift in investor sentiment. The post-election sunshine and rainbows feeling has dissipated amid a growing sense among investors that implementing major changes could have a negative impact on the short term. The start again stop again talks over tariffs, with significant reversals sometimes occurring more than once on the same day, have taken a toll on stocks, as investor enthusiasm turns to caution amid growing political uncertainty.

Meanwhile, concerns about the health of the economy, particularly in North America, have been growing. Last week brought several disappointing economic reports including U.S. retail sales, and Canadian housing starts. A parade of companies putting out profit warnings for the coming quarter continues to increase. It started with U.S. airlines two weeks ago, continued last week with Nike and the end of the quarter is approaching fast. Another potential issue that appeared recently is the potential negative impact of the relatively strong U.S. dollar on the earnings of U.S. exporters and U.S. multinationals.

Meanwhile, Gold reached a new all-time high above $3,000 last week while cryptocurrencies continued to struggle, a sign of investors dialing back risk and increasingly seeking safety. In equities, there has been a rotation of capital away from cyclical sectors like Industrials, consumer discretionary and financials toward traditionally defensive areas like telecom, utilities and health care. Recent weeks has also seen capital moving away from North America into international equities, particularly in Europe and China.

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TOP PICKS:

Agnico Eagle (AEM TSX)

Gold miners dominate the top of the Canadian relative strength rankings. We have held Agnico Eagle in our portfolios for several months and it continues exhibit relative strength.

T-Mobile (TMUS NASD)

There has been a rotation in U.S. markets out of cyclicals and into traditionally more defensive areas, such as Telecom. TMUS is currently the top ranked stock in our U.S. relative strength universe and is held in our portfolios.

BMO China Equity Index ETF (ZCH TSX)

International equities, particularly China and Europe, have been performing increasingly well on a relative basis. Among Canadian listed ETFs, ZCH.TO is among the leaders in our relative strength rankings.

PAST PICKS: November 29, 2024

BMO S&P US MID CAP INDEX SERIES UNITS ETF (ZMID TSX)

• Then: $50.83
• Now: $46.17
• Return: -9%
• Total Return: -9%

MANULIFE FINANCIAL (MFC TSX)

• Then: $45.07
• Now: $44.36
• Return: -6%
• Total Return: -1%

NETFLIX (NFLX NASD)

• Then: US$886.81
• Now: US$960.50
• Return: 8%
• Total Return: 8%

Total Return Average: -1%