Hap Sneddon, founder & chief portfolio manager at Castlemoore, shares his outlook on Technical Analysis.

Hap Sneddon, Founder & Chief Portfolio Manager, Castlemoore

Focus: Technical analysis

Top picks: Amgen, Algonquin Power, iShares Dow Jones US Insurance Index Fund ETF

MARKET OUTLOOK:

Since the April lows, markets have been buoyed by the 20-day moving average. The typical soft patch we see from late July through to early August did not materialize this year, making the set up to the seasonally strong part of the year from late October through to April a little less predictable this year.

While it is much easier to expect seasonality to kick in after some weakness, it’s not unprecedented for markets to surprise investors expecting a correction.

The perkiness of the U.S. dollar index and the higher lows in the volatility index on the very short term suggest that we are entering a corrective phase.

We never know how markets stop going up – it’s always a different combination of time and price. Sometimes the movement can be dramatic and other times it’s just a pause.

In the meantime, while there is media chatter that things are softening, corporate earnings are expected to be good for the ninth quarter in a row after a sold Q2 print. Estimates have been increased for Q3 and longer guidance raised. As we move through the month, we’ll analyze this tension but start with the premise that an object that is in motion stays in motion.

TOP PICKS:

Hap Sneddon’s Top Picks: Amgen, Algonquin Power & iShares Dow Jones US Insurance Index Fund ETF Hap Sneddon, founder & chief portfolio manager at Castlemoore, shares his top stock picks to watch in the market.

Amgen (AMGN NASD)

Amgen is a biotechnology company that develops and manufactures human therapeutics in areas of high unmet need. Its drugs provide solutions for the toughest diseases, particularly ones in oncology, inflammation, cardiovascular, and neurology. The company has an impressive pipeline of drugs and deep track record of commercial execution. Near term valuation concerns have presented a good entry point for mid- to long-term investors. Daily technical indicators are trying to turn up though the longer-term ones may take a little while longer to do the same. As the saying goes “the most money is made in markets by sitting on your hands”. It’s one to be patient with once your invested.

Algonquin Power (AQN TSX)

Algonquin Power and Utilities operates two businesses in Canada and the US: Liberty Power, with renewable energy (wind and hydro) and thermal energy (natural gas cogen and peaking power) generation assets and Liberty Utilities, with regulated water, gas, and electrical utility distribution assets.

The company recently reported decent earnings and operational progress. The recent quarter also saw much action in its regulatory developments, including reaching settlements in its various water utility rate cases. In its pursuit of becoming a top-quality utility company, in large part by growing its regulated business, Algonquin has now created a new role of chief regulatory and external affairs officer to manage its rate increase procurement. It pays an nice little dividend of 4.43 per cent too.

iShares Dow Jones US Insurance Index Fund ETF (IAK NYSEARCA)

This low-cost ETF invests in the US insurance investment index, holding some big names such as Progressive, Chubb, Travelers, All State, AFLAC, and MetLife to name a few.

The sector has both strong seasonal and technical tailwinds at its back right now. There are always risks from loss cost shocks and natural catastrophes, but trends in AI adoption to assist with claims and underwriting processes, ecosystem-driven growth and alternative investments exploration are known positives.

Disclosure:PersonalFamilyPortfolio/FundAMGN NASDYYYAQN TSXYYYIAK NYSEARCAYYY

PAST PICKS: OCTOBER 9, 2024

Hap Sneddon’s Past Picks: Walmart, Nutrien & Constellation Software Hap Sneddon, founder & chief portfolio manager at Castlemoore, discusses his past stock picks and how they’re doing in the market today.

Walmart (WMT NYSE)

Then: US$80.40

Now: US$103.05

Return: 28%

Total Return: 29%

Nutrien (NTR TSX)

Then: $67.26

Now: $83.34

Return: 24%

Total Return: 28%

Constellation Software (CSU TSX)

Then: $4368.03

Now: $3947.77

Return: -10%

Total Return: -10%

Total Return Average: 16%

Disclosure:PersonalFamilyPortfolio/FundWMT NYSEYYYNTR TSXNNYCSU TSXNNY