Mar 22, 2024
Colin Cieszynski's Top Picks: March 22, 2024
BNN Bloomberg
Colin Cieszynski’s Market Outlook
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Colin Cieszynski, chief market strategist at SIA Wealth Management
FOCUS: Technical analysis
MARKET OUTLOOK:
Equity markets have been on a roll since the beginning of December and remain well supported with the Dow Jones Industrial Average and the S&P 500 hitting new all-time highs this week. This has been a big week for central banks with Japan and Taiwan raising interest rates, while Switzerland cut its benchmark rate. The U.S. Federal Reserve, England and Australia all held rates steady but backed away from talk of further rate hikes. With the party line from the majority of central banks being neutral to slightly dovish, alternative currencies like gold and Bitcoin have rallied to all-time highs this month.
The Fed raised its U.S. GDP forecast for this year, indicating a positive environment for corporate earnings, which traders have responded favourably. The Nikkei has rallied to its highest levels in decades and Chinese markets have been bouncing back after a series of stimulus announcements.
A resilient North American economy and the potential for an improving Chinese economy has improved the outlook for resource demand sparking rallies in crude oil and copper, which has also extended into energy and materials stocks. Meanwhile, in recent days, technology stocks, which have been driving the bus since the current rally started, have started to falter on a relative basis with investors apparently taking profits and rotation out into other sectors, a potentially positive sign for market breadth.
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TOP PICKS:
NVDA remains the top-ranked stock based on head-to-head battles in its broad based and sector universes. This week’s new product announcements helped NVDA but weighted on competitors, including Intel and AMD (which is also held in some portfolios managed by SIA Wealth Management). Nvidia has been a green-zone stock in SIA rankings and also held in SIA Wealth managed portfolios for more than a year. It is an example of the power of relative strength analysis and that the “trend is your friend.”
With the price of crude oil climbing, energy stocks have been attracting capital in recent weeks. Athabasca Oil is the highest-ranked energy stock in our Canadian stock universe and the highest-ranked of our energy holdings.
Lilly has been a top-ranked stock in the SIA S&P 100 Index universe for the last year. It is an example of how relative strength analysis can identify relative outperformers in broad universes and also within sectors. While LLY has more than doubled over the last year, the SIA Drug sector has struggled, gaining about 20 per cent over the same time frame. It spent most of 2023 near the bottom of the sector rankings and has climbed up toward the middle over the last few months.
