December Update - It's beginning to look a lot like... a great market year!

Money is a tool. 
It is something that supports your life!

Canada's unemployment rate rises to 6.8%

Canada's jobless rate rose to 6.8% in November, its highest point since January 2017, excluding the pandemic years. The economy added 51,000 jobs, with 45,000 of those new jobs added in the public sector.

Interest Rate Talk

This week's BoC rate decision is the highlight of the economic calendar. Poll showed economists expect a 50bps rate cut on 11-Dec despite currency concerns. Close to 80% of Reuters poll respondents put down 50bps this week, leaving the benchmark rate at 3.25% with a minority sticking to a 25bps rate trim. Economists expect the BoC to cut rates by at least another 75 bps to 2.5% or lower by the end of 2025.

Old Market Adage

In any five-year period for the markets:

One year will be much better than expected (2024) and you will want to take on more risk than you should.

One year will be worse than expected and you think I don’t know what I am doing (2022).

Three years will be about what you expected.

My job is to keep you invested when you feel like bailing out and keep you grounded when everything looks great.

 

Our Portfolio Management Approach

*Hopefully everyone has a chance to listen to our podcasts*

We are fundamental investors that use technical analysis to manage short-term market risks. We believe that risk management is not a choice, but a necessity. While we cannot control how much downside the market provides during a correction, we can control how much of the downside your account receives. We aim to avoid 60% or more of the decline in any significant downturn. Without our process, there is a good chance you will experience 100% of the downside from the market. We will help you navigate the risks and rewards of the market so that you can stop worrying about your money and start living your life.

 

Transactions

November was a slower month in the portfolio.

We increased our weightings in Dream Industrial Reit and CN Rail. Both names are at the bottom of their trading ranges.

We took profits on CGL, our gold ETF and sold the recently purchased RDVYN.

We have 20% of the account in cash and are looking to add on any pullbacks.

Returns on our 60/40, 70/30 & 80/20 portfolios, before fees:

Interesting Charts

Technical Comments

• The November monthly S&P Candle was a big bull bar closing near high.
• Last month, we said the market remains Always In Long. Traders would see if the bears could create a strong follow-through bear bar (an entry bar) in November, or if the market would trade slightly lower but stall and close with a long tail or a bull body instead (like Aug and Sept).
• The bulls made a new all-time high in November.
• They got another leg up, completing the wedge pattern (Mar 21, Jul 16 and Nov 29) and an embedded wedge (Aug 30, Oct 17, and Nov 29).
• They want the market to continue in a broad bull channel for months.
• If there is a pullback, the bulls want it to be sideways and shallow (filled with weak bear bars, bull bars, doji(s) and overlapping candlesticks) and form a higher low or a double bottom bull flag with the September 6 or August 5 lows.
• The bears want a reversal from a wedge (Mar 21, Jul 16 and Nov 29) and an embedded wedge (Aug 30, Oct 17, and Nov 29).
• They see October as a possible 1 bar final flag of the move and the big bull bar in November as part of a developing buy climax.
• The problem with the bear’s case is that they have not yet been able to create bear bars with follow-through selling (since Oct 2023).
• They must create bear bars with follow-through selling to show they are back in control.
• Since November candlestick was a bull bar closing near its high, it is a buy signal bar for December.
• Because the candlestick closed near its high, the market may gap up on the Monthly, Weekly, and Daily charts on Monday. Small gaps usually close early.
• For now, the market remains Always In Long.
• Odds slightly favor the market to trade at least a little higher.
• The move up since October 2023 has lasted a long time and is slightly climactic.
• While the risk of a pullback increases, the bears need to do more to show that they are back in control.
• Until they can do that, traders will not be willing to sell aggressively.
• For now, traders will see if the bulls can create more follow-through buying in December.
• Or will the market trade slightly higher but stall and close with a long tail above or a bear body instead?

Year End Tax Planning

The following article discussed tax planning opportunities to help reduce your 2024 tax bill.

1. Tax-loss selling
2. Charitable donations and other tax credits/deductions
3. Pension Income Credit
4. TFSA Withdrawls
5. RRSP contributions for those turning 71
6. Payment of quarterly tax installments
7. Tax-free First Home Saving Account
8. Alternative Minimum Tax
9. Employee Ownership Trust

Click here to read

 

Our team is always accepting new clients. If you or someone you know may benefit from our different financial offerings, please don't hesitate to reach out to us.