Merry Christmas & Happy Holidays!

SYNOPSIS

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Well, it looks like the extremely wealthy got their tax cut. Now what does that mean for the markets? The optimists think that the large corporations will start paying higher salaries and create new jobs. There has never been any credible evidence of this “trickle down” effect before, so why should it start now? Buy stocks of these corporations, who will keep the poor poor; because they will be more profitable with lower tax rates.

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Last Week in the Major Indexes… One-week gains were quite modest last week with the exception of the Canadian small caps, that have seemed to be in hibernation for many months. The S&P/TSX Small Cap Index actually gained 2.9% last week…. moving it up to #4 in the trend rankings from the bottom of the list last week.

Last Week in the Sectors… The outstanding sector last week was (once again) the S&P/TSX Health Care Index, which is now rising at 3.1% per week. Do you remember the single company that’s responsible for that stellar performance? Don’t worry. We’ll remind you.

Bubbles & S-Curves: Do You Know the Difference?

SYNOPSIS

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At US$18,000 apiece, a pan-handler is not likely to have too many Bitcoins dropped into his hat, and the “coins” wouldn’t even be visible anyway, if someone were so generous. Come and see where we’re going with this topic this week in the PTA Perspectives section.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) declined to 287% from 352% a week earlier. The S&P 500 APAR dropped 2 percentage points, while the S&P/TSX Composite Index APAR rose 1 point.
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Last Week in the Major Indexes… Most of the major indexes rose last week… some as much as +1% or higher. Just the S&P/TSX Composite Index had a small one-week decline.

Last Week in the Sectors… There wasn’t much sector rotation last week, although US Telecommunication Services stocks improved quite a bit to put that sector in the #2 spot in the sector rankings.

PTA Perspective… Bubbles & S-Curves: Do You Know the Difference?
While the business media are obsessed with financial market “bubbles”, we explain how meaningless that term is, and how S-Curves can account for rapid market advances far better than bubble mania. We’ll let you decide how effectively we present our case.

Fairy Tale Stocks Rarely Have Happy Endings!

SYNOPSIS

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Whether you laugh at this week’s cartoon or not, there is no doubt that cannabis stocks have been equity market leaders lately, with some of the strongest trend values. But this is almost totally a Canadian story. Don’t waste your time looking for US pot stocks, when the biggest and best opportunities are north of the border. Most Canadian marijuana stocks are cross-listed in the US, so American investors can buy them too.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) rose to 352% from 343% a week earlier. The S&P 500 APAR gave up 7 percentage points, while the S&P/TSX Composite Index APAR lost 5 points.
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Last Week in the Major Indexes… One week changes were fairly small last week in both directions. The S&P/TSX Small Cap Index had the largest decline over the week. The ranking of the trend values continues to favour US equities.

Last Week in the Sectors… With the exception of the Canadian Health Care sector (a very small group of stocks), the sector trend numbers generally favour US equities. The TSX-based Materials and Energy sector trends have turned negative.

PTA Perspective… Fairy Tale Stocks Rarely Have Happy Endings!
As a long-term critic of the media, especially business and investing media, Trump’s obsession with “fake news” is very annoying. We take our criticism seriously and have always pulled together facts and figures and academic research to support our arguments that current media coverage is poor, and often harmful to investors. Trump, on the other hand, glibly claims that any media coverage that doesn’t flatter him is “fake news”. No evidence. No rationale. Just a claim that he can’t be wrong, because he is president. That’s sad, but more importantly, it undermines those of us who take our critique of the media seriously. This week we do our best to simply lay out some of our arguments for rational media criticism, and hope that you’ll see the difference between that and Trump’s meaningless phrase, “fake news”. We specifically focus on “fairy tale stocks”… the media darlings that capture the imagination of long-term investors.

Year-End Considerations

SYNOPSIS

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And, from other sources…

  • Elected US congress reps & used car salesmen are tied for most distrusted professions in the US… according to US voters!

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  • As of the most recent polls last week US congressmen have even lower confidence ratings than Donald Trump!

The US system is broken, and it will take it’s toll on the US economy, in spite of a tentative tax cut that just might be turned into law. For this season at least, Santa offers coal to congress.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) rose to 343% from 268% a week earlier. The S&P 500 APAR gained 9 percentage points, while the S&P/TSX Composite Index APAR lost 8 points last week.

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Last Week in the Major Indexes… There were lots of one-week gains, but not among the Canadian indexes. Nasdaq finally pulled back from its #1 trend position, to let the DJIA taken over.

Last Week in the Sectors… Information Technology and Materials have slipped quite a bit week-over-week, while other sectors have edged up to fill the gap.

Investor Confidence… The November results for the State Street Investor Confidence Index have just been posted this past week. The Global Investor Confidence Index decreased to 97.1, down 1.0 point from October’s revised reading of 98.1.

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As usual we provide more detail on the regional ICI’s in the full edition of TrendWatch Weekly.

Seasonality… We review the results of the US Thanksgiving trade for this most recent instance, and the outlook for the remainder of December and into the new year.

PTA Perspective… Year-End Considerations
As an extension of the Seasonality section, we discuss other year-end considerations that go beyond picking your Xmas stocks to put under the tree. Investors need to be aware that while December is a great month in terms of average returns on equities, there may be some speed-bumps due to tax selling and window dressing. One or the other may apply to you. More in the full edition of TrendWatch Weekly.