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A Confluence Of Trend Lines- July 24th, 2020

The US markets drifted lower, with the leading large-cap tech names selling off and moving below their trend lines. Materials and retail now have the highest SCTR rankings for sectors. Both the Nasdaq and SPX made higher closing highs early in the week. Continue Reading

Chilling Charts- June 27th, 2020

The markets closed lower on all the indexes this week. After seeing some all time record volumes, we started to see changes in the index performance. While the herd is still huddled in the US large caps, selling was more pronounced as you look down the size scale of market capitalization. (How large the company is based on multiplying the number of shares by the price per share). There were notable differences this week. Canada, a smaller market, broke the advance/decline line for the uptrend and this is a caution flag for the US. Weaker, smaller markets typically break before the US does. Sweden is a good clue for Europe, and it held up better than I expected. I covered world indexes in the commodity video. So many cyclical (they cycle up and down with the economy) charts have started to decline after touching their 200 DMA. Just scrolling through the Dow 30, JPM, PG,MCD, MRK, IBM, VZ, KO,DIS,TRV, AXP,GS,MMM, DD,UTX, CVX, RTX, CAT, XOM have all failed at the 200 DMA. You can big banks like C and BAC to the list. The Nasdaq Composite recorded the highest volume ever on Friday. The SPX also recorded a high volume day. We have had extreme volume days in each of the last three weeks. One after the Fed meeting, Quad options, and now the final Friday before quarter end. This is a twitchy market, slowly showing that times are changing from the controlled uptrend.

From last week’s newsletter : “From a high level, the SSIH indicator moved lower by another 5%. That level of movement can happen within an uptrend. The big thing for me is the 5% down day on the $SPX the prior week after the Fed. Those days don’t usually show up in uptrends. So caution is creeping in. Now that we have pushed through options expiration on really high volume, I’m watching to see are people starting to price in the weak earnings for the second quarter? Or is the market starting to focus on the COVID 19 resurgence in some of the more populated states like Texas, Florida, and Arizona? We are about to find out.”

Summary: The COVID surge is changing the market as is the move towards earnings season in July. Caution is warranted. Tighten stops. Serious storm clouds on the horizon.

Let’s jump into the charts.

Chilling Charts

Quarterly Newsletter: Feeling fearful when markets turn? Time for a risk reality check

Feeling fearful when markets turn? Time for a risk reality check

Depending on your age and investing experience, the market downturn in March caused by the COVID-19 crisis may have been a real shock or just the latest in a series of unfortunate events in your investing life. Either way, these types of market gyrations bring to the fore our personal relationship with risk. While we may understand risk as a concept,
especially easy to do when the markets are up, it takes a serious downturn to face our emotional reactions to risk. If you’ve been feeling anxious, it may be time to reevaluate your tolerance for risk. Continue Reading

Staring Into The Second Half July 2nd

For the NASDAQ 100, its been a rally! Never underestimate the power of the Fed probably has to be the best lesson. The second best lesson is portfolio managers worldwide have tightened the diversity in their portfolios to focus on Nasdaq 50 stocks. The hedge funds that trade more frequently have made money both short and long this market.

With employment turning up from the deep lows, this is a late indicator but supportive of higher markets. Having the Nasdaq higher than February is apparently normal as it must have been undervalued then! The conversations around news flow are really difficult to absorb. There is an entire financial analyst community using earnings to value markets, yet the earnings for 80% of the publicly traded market are going to come in dramatically lower. So the discussion has evolved to only looking at 2021 earnings, because we have already had a re-rating for 2020. That conversation does not fly with me at all. Who can guess what 2021 is going to look like? Continue Reading

Crossing The Line In The Sand Weekly Market Review May 30th, 2020

MARKET COMMENTARY

A strong week globally for equity markets really added fuel to the ongoing bull market. As COVID fears moved into the rear-view mirror for now, the markets continued to rally. While the NASDAQ tested the same highs three days in a row, it continues to hold near the old highs of February. As I mentioned on the video, volume was almost miraculous, soaring to big levels. While I continue to be amazed that debt doesn’t matter, I must be looking for trouble at a party, instead of just enjoying the party.

This week the Schnell Strength Indicator moved up significantly to 96%. 20% of my data set improved from negative to positive! When momentum is this bullish, it is a strong backdrop. In January 2019, it took 3 weeks to reach this level of momentum off the lows and it lasted 4 months. During this rally it took 10 weeks to get here with a big surge this week. I can’t predict what will happen but it is very positive. Historically, momentum this strong usually has to wane before the market can drop meaningfully, so this is a very bullish development. As bizarre as the world is, investors are bullish globally. The big news this week, was the S&P 500 moving back above the 200-day moving average, which is considered a simple long-term method of defining a positive market or a negative market. Smoother markets above the 200 DMA would be nice. While it was a positive development, lets make sure it holds above it this week. The Nasdaq has work to do too. Japan moved up 1500 points or 7% this week, on more borrowing and central banking activities. Europe moved up on rumours of creating more debt as Europe needs time to implement everything with the EU approvals process. Last week I mentioned: “If the globe is going to stall out here, it’s technical analysis 101. What was support, becomes resistance.” So far, no stalling, but the Nasdaq does need to take out the prior high. China rallied just enough this week to stop a sell signal on the monthly charts. Metals have a nice rally starting or going in the case of lithium.

Summary: The commodities rally looks ready to run, look there. A rotation away from the big tech names appears to be underway as the rally broadens out. That doesn’t mean they won’t rise. It just means investors are looking at other areas too.

Let’s jump into the charts. Continue Reading

Threading a Needle Weekly Market Review April 04, 2020

Market indexes dropped in volatility and price this week which should tilt me to be bullish. With the $VIX still above 45, it is still very volatile out there. I am not a big $VIX follower, but being aware of the VIX trend in this elevated environment can be informative. The difficulty is the market was down 7.5% off its recent highs and the $VIX was still falling.

Stalling After The Bounce Weekly Market Review February 22, 2020

Market indexes closed lower as Microsoft and Apple pulled back. With the Nasdaq down 2% on Friday, it would appear that the technical correction is starting. This week the trend line on the Yen broke, following the Euro’s breakdown last week. With currencies changing, I watch for changes in the equity markets.

Crushed! Weekly Market Review February 29, 2020

Market indexes were crushed. Period. In equities, the $SPX was down 12% this week. Everyday was another selling day coming off the options expiration Friday. Whoosh. The carnage had the most scale in the high fliers club and the previously weak groups like energy. Some of the names were down 30% off the highs.

Quarterly Newsletter: Ready for retirement? How to find out before you do it

When the time comes, will you be ready? The transition to retirement can be a real challenge for many of us. In fact, a 2019 poll by a major Canadian financial institution found that more than a quarter (27 percent) of retired Canadians regret retiring and an almost equal number (23 percent) have tried re-entering the labour market.

So What Actually Happens if I Don’t Have a Will?

Ate Poison Without Having a Will

 

No one can predict the future. And while we all know that we should have a Will, most don’t fully understand how Wills and Estates really work, or what issues they may protect against. While there is a wealth of information out there on Google,1 it can be a bit dense and unnecessarily complicated. So let’s try something different. Instead of a detailed, textbook explanation about the effects of a Will, lets look at what happens if you die without preparing one, and see if we can skip over the legal gobbledegook.

What happens to your dependents when you don’t have a Will?

Choosing a Guardian is probably the most important part of a Will for parents. If you have minor children, a Will is the best way for you to name a Guardian for your child. When you don’t have a Will, by default, your spouse (or ex) will generally be awarded custody, and if there is no biological parent involved, it will depend on who applies to the court. With no Will in place, a court may ultimately decide who will raise your children.

What happens to your assets?

There is a provincial statute that determines what happens when you die without a Will. This legislation is designed to approximate what the average person would likely write in their Will. There are two major issues with this:

  1. You are probably not the textbook average person.
  2. You are almost certainly not the government’s idea of a textbook average person.

The exact breakdown can be found in the Wills and Succession Act,2 but generally speaking, everything will go to your spouse, then to your children or grandchildren. Different rules apply if you have a blended family or if your spouse is not the biological parent of your children. If you have no descendants, then everything goes to your parents, then your siblings.

The major downsides? If you have a partner who does not qualify as your Adult Interdependent Partner (AIP) they will likely get nothing from your Estate. On the flip side, if someone meets the definition of an AIP, they might get everything. Even if you haven’t put a label on it, the government may have. So what’s an Interdependent Partner? Well, this is what is generally referred to as a common-law partner, but there are specific requirements in the Adult Interdependent Relationships Act 3 and you’ll need to look at it to see if your partner qualifies.

On the other side of the spectrum, if you’re separated and have a soon-to-be ex spouse, they will still be treated as your spouse (i.e. they may get everything) if you die before your divorce is completed, or before you have been living apart for two full years.4

Incidentally, this also occurs if you wrote Wills that name each other as the beneficiary of your Estate. It is still valid (and everything would still go to your ex) until the divorce is finalized. Which is why it is important to keep your Will current, especially after big life events!

If you have children, then any funds going to them will likely be paid to them on their 18th birthday, regardless of how ready they are for such a sudden change to their bank accounts.

Side note: In some families, when you turn 18, you are considered to be an adult and fully capable of making mature decisions, so they are happy to leave large sums of money to 18 year olds. In many of these cases, I have found there are strong family responsibilities that prevent an 18 year old from squandering their inheritance. Personally speaking, if I had received a large amount of money at that age, I would have bought an expensive car and destroyed its transmission while I learned how to drive standard. Or I would have bought a million video games and never gone outside. Or I would have bought some hot tech stocks (like MySpace, AOL, and Palm). All of which is to say, I don’t know what I would have done, but the chances of me being smart with my money at age 18 were pretty small. 

If you have any family heirlooms that you want to leave to a specific individual, then that is unlikely to happen if you do not have a Will.

If you ever wanted to leave anything to a friend, a charity, or to ensure that your pet is cared for, then you need to put it in a Will.

What about taxes?

A well-crafted Will Package will help minimize the taxes your estate needs to pay. With no Will in place, there will be no tax planning regarding the disposition of your Estate, so the size of your Estate may be significantly smaller. Your Estate will probably be subject to tax penalties that could have been avoided.

Your Will puts you in control

Ultimately, the problem with not having a Will is that you spend your whole life trying to build something – earning money, growing your assets – only to allow the government decide where it should all go.

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