tmta -3- march 16 2016 - · pdf...
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TMTA Theme | Momentum | Technical Analysis
Blog Post #3 | March 16, 2016
Settling in
Another Fed meeting come and gone and as of 2:39 p.m. eastern standard time, it seems the market liked what Jay-‐Y had to say. Is the bottom in? I would have to say yes. Yes to gold, yes to crude and yes to the Canadian markets. Don’t get me wrong – it’s not like we have the “all-‐clear” signal – the TSX is hovering under the 200 day moving average and a dropping 50 day moving average is threatening to execute its dreaded “death cross” voodoo on the market. Gold is unexpectedly spiking higher on the news that there will be no rate cut, but I am loathe to chase that market right now. A pullback is in order, and when it arrives it will provide a perfect, and probably scary at the time, opportunity to get long for the next bull run. Crude is grinding higher and sees a lot of resistance at $40, but again, I believe a pullback in the future should provide an excellent entry point – the fact is that we are still awash in an over supply of crude, so we should expect downside shocks. That said, I’m in the $50 camp – by year end.
The gold market has everyone’s interest these days. The best performing asset class since the Fed raised rates for the first time in nine years back in December. I think we’re setting up for a new bull market in gold, but not yet. We need to see a meaningful retest of the breakout before I’ll be convinced. It will probably be gut wrenching, but that will be the signal that the trade is good.
Gold Watchlist Physical 30%
I’ve started a watchlist for gold stocks when the time comes. During the last run in gold I made the grave mistake of not owning physical gold. I will not make that mistake again. * I will make 30% of my gold allocation physical gold
TMTA Theme | Momentum | Technical Analysis
Figure 1: Richardson GMP Research
Birds of a Feather? If you watch the Canadian markets or hold an index related mutual fund you’re likely to be sick and tired of the Valeant gong-‐show, I know I am. But this gong show is gonna make me some money. Because while everyone is focused on Valeant and the SEC and all the drama – I’m adding Concordia Health TSX:CXR to my
portfolio. The market has a wonderful way of handing you opportunities if you can ignore the noise. First we had that little shit Shkreli bring a lot of unwanted attention to the entire biotech/pharmaceutical space -‐ then Hillary C picked up on the PR angle in her run for President – an interesting move considering her past affiliation with big pharma as well as her current support from same. Heap the negative media a market that seems to be confusing
The challenges are not over for the energy sector but the funding taps have been turned back on which will help support higher quality companies. Continue to avoid E&P companies with a high debt load. Stick with high quality yield opportunities – but wait for a pullback. I anticipate the crude sector to look something like the chart below over the next 6 months most likely stuck in a range through year end.
TMTA Theme | Momentum | Technical Analysis
pharma debt with oil debt (debt is debt, but all debt is not the same) and it’s all just a jumbled mess! But just because Valeant and Concordia are part of the same flock – doesn’t make them the same bird…you get my drift?
Birds of a Feather? Deux… Amaya gaming TSX:AYA is another company that shit the bed recently. Missing on earnings and just generally upsetting the market at the wrong time. Their fearless leader recently decided to pick up his marbles and go home – announcing an attempt to take the company private at $21 a share, down from recent highs in the $35 area. Like the Valeant a Concordia situation, TSXV:NYX has been smacked down with the entire online gaming sector in Canada thanks to Amaya. I picked up a small position in TSXV:NYX prior to Blog Post #2 based on a technical breakout. Upon further due diligence I think I found another beaten down gem. NYX Gaming Group handles the back-‐end for Amaya’s online poker websites, amongst other online gaming activities, and recently announced better than expected earnings and upped their guidance for 2016…the market is beginning to take notice.
Fresh Picks
TSX:CXR, NASDAQ:CXRX Concordia Health
Rationale: Top quality health care opportunity beaten down with the whole sector -‐ compared directly, and unfairly, to Valeant. The market is giving almost no value to the core business – focusing on debt and confused by the noise surrounding the biotech/pharma space right now. Yes, it’s the same model as Valeant – but Valeant was Biovail (click link to read of the troubled history) and Biovail/Valeant always has, and most likely always will be a troubled company.
TMTA Theme | Momentum | Technical Analysis
Entry Price: under $43 Target zone: First price target -‐ $64.50 -‐ $75.00 Gap fill Stop: Close below February lows of $37.15 Risk: Known as “baby-‐Valeant” Concordia is exposed to any negative news from VRX and the pharma sector in general.
Concordia tracks Valeant (black line) quite closely, but is fundamentally a completely different situation. Let the haters hate – ignore the noise!
Buy CXR for growth – ignore the noise!
TSXV:NYX NYX Gaming Group
Lots of charts – I love the technical setB up for NYX. oops - R = $3.25
TMTA Theme | Momentum | Technical Analysis
Nice consolidation with 7 weekly touches on the $3.25 area with higher lows since November. Once it pops through $3.25 it should move quickly through the volume pocket (more on that topic in another issue) to the $4.25 area.
Rationale: Smashed down with other online gaming stocks thanks to Amaya, NYX is a company on the rise. News flow has been very positive but the sheep look to Amaya and cower in the corner ignoring a stock whose next move will be to the TSX. A fast move is possible with NYX if Amaya does in fact go private, because there will be a lot of money floating around the market looking for online gaming stocks and NYX and TSX:IT will be the beneficiaries of those funds! Rumors of industry consolidation could fuel speculation in the space as well. Entry Price: under $3.25 Target zone: $5.50+ -‐ new all-‐time highs Stop: Weekly close below $2.50 Risk: General market risk Buy NYX for growth – and an upside spike on Amaya going private
TMTA Theme | Momentum | Technical Analysis
REITS HAVE BEEN ON FIRE! As have many yielding stocks. The theme remains strong and in tact: Boomers need their income!
We have the TSX:SOT.UN but I was late to hop onto another idea.
Watchlist: TSX:VSN – a difficult space to be in – LNG, but well regarded and yielding 11+%...I will do some digging. This could be the next yield add. I wanted more than the SOT.UN, but I won’t chase the REIT market now. TSX:KXS – a fallen star in the Canadian tech sector = a possible opportunity? TSX:SH – Facebook is just killin it! And these guys are tapping in to FB…I think…more later
TMTA Theme | Momentum | Technical Analysis
I took profits in TSX:TOG in my personal account and added some to the family accounts for the long term. Perhaps I left a bit soon, but I caught a nice move in TOG and IPL, and decided to keep the IPL for the better yield and to free up cash. There’s always another bus…
Author Ownership (Current and past picks – Deletions * Additions in red)
Symbol FAMILY PERSONAL NONE TSX:DF √ √ TSX:HTA.UN √ TSX:IPL √ TSX:TOG √ *
NYSE:WLL √ TSX:SOT.UN √ TSX:CXR √ √ TSXV:NYX √ √ The Author may, at any time, purchase positions, add to positions or dispose of existing positions without notice.
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TMTA Theme | Momentum | Technical Analysis
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