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

February 09, 2019 | Nick Scholte


Share

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

We accept new clients primarily by referral from our existing clients. If you have family or friends who would be a good fit for our specialized wealth management services, please let us know.

Any recommendations herein are for the exclusive use of clients of RBC Dominion Securities and Investment Advisor Nick Scholte. Any other direct or indirect recipient of this email should consult with his/her own licensed investment advisor prior to implementing any investment action he/she may be contemplating.