While Markets are "Overbought" on the Back of the V-Shaped Recovery, Any Pullback Should be Technical in Nature and Not Impede the Positive Economic Outlook

Feb 08, 2019 | Nick Scholte


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In addition, annual client reviews continue

To my clients:

It was an up week for North American stock markets with the Canadian TSX rising 0.8%; the U.S. Dow Jones Index rising 0.2%; and the U.S. S&P 500 rising 0.1%.

I have no material economic commentary this week. Instead, I’d simply point out and reiterate (as I have been doing in annual client reviews) that the markets experienced a V shaped rebound from the December 24th lows. Last week I suggested that February is likely to be more of a “sideways” month. Absent a significantly positive development in the U.S./China trade negotiations, I’d continue to maintain that outlook. In fact, if anything, markets may experience a decline in the coming days and weeks as, in the short term, markets have become strongly “overbought”. However, any short-term decline should be technical in nature, and less material than the gains we have seen the past 6 weeks. The economic outlook remains positive with no recession in sight. If markets do experience a continued technical decline, I’ll continue to add back the positions that were sold last December for tax loss purposes. I have been chipping away at this task the past three weeks.


That’s it for this week. All the best,

Nick
 

Nick Scholte, CIM, FCSI

Vice-President & Portfolio Manager
RBC Dominion Securities Inc. │ Tel: 604.257.7569 │ Fax: 604.235.9950
3200-1055 West Georgia │ Vancouver, BC │ V6E 3P3
Toll Free: 1.844.665.9900 │ nick.scholte@rbc.com

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