Phases and Cycles: Market Outlook – July 05, 2024

Larry Gaucher |

The broader equity markets have clearly been trading in a holding pattern since April of this year. We are not seeing the continuous higher highs of November 2023 to March 2024. During that period, we saw the advancing issues clearly outnumbering the declining; this changed in April, when there were more declining issues than advancing for the first time since October 2023. May returned to a positive month but June was relatively flat.

After reviewing more than 450 Canadian and U.S. stocks by sector, one thing is quite apparent: stock selection is imperative. Even in the ever popular U.S. Tech sector, which supported the SPX into higher highs with a few heavily weighted stocks like Applied Materials (AMAT), Apple (AAPL), Alphabet (GOOG) and NVIDIA (NVDA), there were many other US Tech stocks that performed poorly during Q2 of 2024 such as Accenture PLC (ACN), Salesforce (CRM), Jabil ( JBL) and Epam Systems (EPAM), just to name a few.

On the TSX, with Financials and Energy making up about 50% of the index, they too greatly influenced the direction of the index which remained in a wide horizontal range. During Q2, roughly one-third of the Financials performed well, another third fared poorly, and one-third were flat. Meanwhile, Energy stocks performed better overall and stocks that have recently corrected in this sector, appear on the verge of resuming their respective uptrends (see our List of Investment Ideas).

 We have often described how a correction may occur either in price (down) or in time (trading range). The slowdown this past quarter has provided the 40wMAs with time to catch up to their respective indices, thereby reducing the gap between them. A sustained rise above the recent trading ranges is needed before we can confirm the resumption of the long-term uptrends of the North American indices. We review the charts and provide breakout levels for the indices on the following pages.

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The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This newsletter was written, designed and produced by Phases & Cycles Inc. for the benefit of Larry Gaucher who is a Senior Wealth Advisor for iA Private Wealth and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.