BMO Nesbitt Burns
800 Manulife Place
10180 - 101 Street
October 2021 Update
Posted on: October 7, 2021
Money is a tool. It's something that supports your life!
October has come at the end of a slower September market-wise. We've come to the end of our 8 bar bull streak as the market has cooled along with the temperatures. As you tuck in for Thanksgiving this weekend, we hope you'll give our blog a read over!
This month's Millennial Minute starts Ashley's journey into finding Financial Independence and she shares her journey every step of the way. This month she covers the importance of putting all of your finances down on paper and creating a budget to match your goals.
Stephen's Technical Comments touch on the end of the 7 bar streak bull market conditions and the expected months of sideways trading over the next while.
We share the Portfolio Spotlight with Tourmaline Oil Corp. and as always, we give a peek into our performance, and we remind you of our extended team members who are here to help you with every aspect of Wealth Management, from mortgages to estates, insurance to financial planning.
We wish you a happy Thanksgiving and a great start to fall!
Interesting Charts & Tweets of Interest
1) Housing prices continue to soar and wages haven't risen at the same pace... How are those first time home buyers affording their first home? Gifts from parents have become one of the most used sources for down payments.
2) Even the cost of food isn't safe from rising inflation and economic strain. Double check that grocery bill next time you're at the store!
3) No matter what stage of life you're in, savings should always be a top priority. How are you keeping your savings from shrinking?
4) A big bear market indicator is the lower P/E as the market moves along. Prices are expected to drop even lower in the future and it's something we are keeping a close eye on...
- September’s candlestick on the monthly S&P 500 chart was a bear outside down bear bar closing near its low and below the September low. This is bearish, but the bull trend is strong. Traders will buy the 1st 2- to 3-month pullback
- September ended the 7-month streak of bull bars.
- There has never been a streak of 8 consecutive bull bars in the last 25-years, and that either September or October would be a bear bar.
- A bear bar should lead to 2 to 3 months of sideways to down trading. You can see that this is what happened with most other bear bars in prior buy climaxes.
- The bulls will try to create a credible High 1 buy signal bar in October. But even if they do, it will probably lead to a lower high and then a 2nd leg sideways to down.
- If the bulls can get a new high before the end of the year, it will probably be brief. An extreme buy climax like this typically results in at least 2 to 3 months of sideways to down trading.
- Traders will conclude that the Small Pullback Bull Trend has ended once there is a pullback that is at least 50% bigger than the biggest pullback in the bull trend.
- The biggest pullback so far was the 10% selloff in September 2020. A bigger pullback typically means 15 to 20%, and traders should expect at least 15% correction to begin before the S&P500 goes much above the September high.
- Remember, the minimum target on the weekly chart is 15%, which is around 3850. That is below the gap above the April 1 high and below the 4,000 Big Round Number.
- There is a 50% chance that September 2 will remain the high for the rest of 2021 and there is a 50% chance that a 15% correction is underway.
- A 50% chance of September 2 being the high of the year means a 50% chance there will be a new high.
September was a busy month in the portfolio. As September got underway, we took profits on most of our positions and trimmed others. We sold all our EFTs as we wanted to increase the level of cash in the accounts and focus on individual names. With a portion of that cash we added to dividend paying stocks we already owned and added new names such as GFL Environmental, Kellogg Co., Verizon, The Travellers Co., Lockheed Martin, and PPG Industries. We also bought oil and gas stocks such as Cenovus and Canadian Natural Resources. We sold Alimentation Coche-Tard, Fartech and Nike. Our tactical S&P 500 current is at a zero weight and will be used to take advantage of short-term trading opportunities.
Returns on our 60/40, 70/30, and 80/20 portfolios before fees: As of October 7, 2021