The Transparent RRSP: Just Watching

No action was taken the week of May 15 
  • I had been uneasy about the market all week, so my only play was to sit on my hands.

The last few months, I’ve been chipping away at making my trades easier to track, record, and analyze. This process was always interrupted by the market, attractive stock picks, sections of my portfolio that needed immediate attention, and addictive Netflix series. Each time I got back to where I left off, I found I disliked my method or format. You would think that after all these years, I’d have figured this out by now.

With summer coming, I expect the market to lighten up in volume and offer fewer opportunities. This means it’s a good time to get back on track with getting organized. I’ve been spring cleaning my house as well as all the portfolio information that I manage, making a bit of progress each day. It feels great to de-clutter my living space and streamline all the pertinent information for my trades. All I can do is keep at it until I’m in a place where I can function effectively on a consistent basis – and still watch my Netflix!


What a week! Here is my market analysis:
xic

The XIC ETF on freestockcharts.com

#1. The trade volume candlestick bars of April 24 and April 25 show an abnormal amount of buying.

With all that buying, there was such little price movement as you can see by the small size of the price candlestick bars. Big volume with little price movement often signifies a reversal. To trade beyond those prices would require even more buying. The following volume bars show that the market could not sustain so much buying. Another thing to note: we have not penetrated those prices since.

#2. What messy, volatile trading!

After April 25, there was more selling than buying. The candles show wider trading ranges, particularly the red bars, which depict heavier selling. I drew a square around this week alone to show you how, in such a short amount of time, the market can drop because of uncertainty, volatility, and buying fatigue.

On Wednesday (the day of that big red candle, third to last), the US market reacted to bad political news and this affected us (as well as many other markets). I believe that generally, markets are more prone to news when they’re already uncertain or weak. A strong market won’t be affected very much or will bounce back quickly. The following Thursday and Friday did show some buying. It will be interesting to see whether or not we can get back up to the previous trading ranges of the last two to three months.

#3. Lots of selling volume.

The trade volume over the last four weeks shows mostly selling. When you’re looking at longer time frames for longer-term buying opportunities, this situation is not tantalizing.

#4. First red monthly candle in almost a year!

We hit a new 2017 low with that one little day on Wednesday this week. What I like about the monthly chart is that it provides a bigger, clearer perspective.

The last time we saw significant selling volume was in June last year (remember the Brexit referendum?) and before that, the last major selling low was in January 2016. We’ve been going up for a year and a half. This new low is minor compared to the massive run we had. Way to go, Canada! If your portfolio didn’t do well last year, then maybe you should take a break from your advisor and consider buying a market index ETF – once it’s a good time to get in.


It will be interesting to see how we trade until the end of May. Whether we close positive or negative, this summer I would like to see a more substantial correction that comes down all the way back to where we were in November before going up again. For most folks – especially unrealistically optimistic people like me – this seems like a drastic thing to wish for. However, I believe that if you want a meaningful run in the market, you need a meaningful correction, not a one day sell-off like Wednesday’s.

I will be watching for how the US market impacts the Canadian market. The tech sector needs to take a break while the energy sector looks like it’s itching to make a run to the upside. I don’t think oil will ever trade back to its previous inflated levels, but I do think it will make a very short-term bullish move along with a short-lived rush in the gold sector. I don’t know if that would be enough to help the US market continue its upward trend. The Canadian market could still go down on its own, but it will to a greater degree if the US also makes a considerable correction.

 

The Transparent RRSP: Some Stock Picks

Actions taken the week of May 8
  • I think I bought 100 shares of Mariana Resources (MARL.V) for $1.70 per share.

This morning, I put in a limit order for the above values. I usually put in a market order which means buying a stock at whatever the market is currently selling the stock at.

When I perform a basic limit order, I put in the price I’m willing to buy a stock at. I like to think of it as this is the most I’m willing to pay per share for a stock, it’s my price limit. Limit orders can have different conditions going for it. My US margin account with Interactive Brokers lets me get a little creative with my orders. Today I put in a limit order because I have to go to work and can’t watch the market live.

If this order goes through, it will cost me $170.00 plus a commission fee of $1.00.

 

marl.v

Price history charts for MARL.V on freestockcharts.com

 

I don’t normally buy charts of stocks that gap up so much in price. Usually, gaps occur because of surprising news. If it’s good news and the stock gaps up, I don’t take action because it just committed a huge price move. Other investors who were in at a lower price will likely take some profits. Often, stocks that gap up go back down to where they started.

When you see a stock gap up, the best move to do is to watch and see how the stock holds. In this case, it held and consolidated for two weeks. The volume has remained intense compared to its previous trading volume. It’s been looking a lot better than the market.

This is a diversified mining company. Recently, the mining stocks are starting to heat up. So if the metals start to move, that will cause this one to take off too. I like this one because it’s been trading on its own page for a while now. I chose it for the RRSP because I think it would be a good hedge and it’s cheap. If it really starts to move in the right direction, I might treat half of it as a swing trade and choose to take profits if the charts indicate a big move is over. We shall see how it does.

This is one of those trades where a part of me says don’t do anything right now and another part of me says go with the momentum while it’s early. So I’m going for it. That is if my order actually gets executed!


I did a search and I have a few other stocks that might be interesting to check out. I’ll disclose that I already own some of these, but they came up in my search. I was happy to see that they were setting up for new entries.

  • Bombardier | BBD.B |$2.21
  • Encana | ECA | $15.56 – I’d watch this first. I think it needs to consolidate longer and shape up.
  • Timmins Gold | TMM | $0.63
  • Aritzia | ATZ | $15.99

Check these out, look at the charts, consider the sector, the company fundamentals, the stock price, etc. Ultimately, consider your risk tolerance and look into whatever you have to in order to feel confident in your investment.

The Transparent RRSP: Post #15

Actions taken the week of April 3
  • I deposited $150.00.
  • I bought 25 shares of TransAlta (ticker symbol TA.TO) for $7.63 per share. This cost me $190.75 + 0.25 cents in commission which makes it $191.00 altogether.

This leaves me with $21.90 in cash. Penny stocks, anyone?

I bought shares of TA because the monthly chart caught my eye. The daily chart displays a long consolidation that shows this stock has been trading in this price range since late November. I had been checking this stock out for a few months now. I never took action because I wanted to wait for a better setup on the monthly chart. The weekly chart is a little sloppy, but I’m not as concerned because of its strong monthly chart.

ta

TA price charts on freestockcharts.com


I’ll just mention that for my TFSA, I bought some shares of TransAlta Renewables (a subsidiary of TransAlta, ticker symbol RNW.TO) at $15.73. I feel like I was late to the party for this one. I just kept missing the good entries. Its price moves are around $2 in range (as you can see from the arrows on the chart below). This stock has already moved up $1.30 since its last selloff in early March. If this goes up from here, it’ll probably stall at around $16.50. We shall see.

I’m not thrilled about the monthly chart; however, the daily and weekly charts, volume action, and monthly dividends made me want in. I like subsequent consolidations because it shows a lot of consensus among investors in price areas just below my entry. This is what traders call ‘support’ because if the stock does fall below my entry point, it’ll likely land softly around the $15.00 area where a lot of people have been buying shares at since January. I’m counting on strength in numbers to hold this stock up.

rnw

RNW price charts on freestockcharts.com

The market was positive this week. If nothing out of the ordinary happens (politically/economically), the market will likely trickle up for the rest of the month.

 

“Should I get Snapchat?”

I hate taking selfies, but I love doing them on Snapchat. A few months ago, my work wife Hunter got me into Snapchat. It has since become a major form of communication between the two of us when we’re not working together.

Snapchat offers a lot of ridiculous photo/video filters (some of which aren’t appropriate), but I find most of them are just fun and silly. It’s like putting on a mask or a costume when do you a selfie on the Snapchat app. I get to become a different persona with each filter. My faves are the filters with a voice changer (you usually get a high-pitched voice or a deep monster voice). I enjoy doing impressions of people and Snapchat allows me to really get into character. If you don’t have the Snapchat app on your phone, you’re missing out! I realize it’s a pretty childish way to use up your time, but for me, Snapchat is a good outlet when I need to take a short break and just get outside my head (and into another).

 

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I never buy IPOs early on – that is, until today. After a stock goes public, I usually wait until the dust settles and I see more signs that the price movement is less volatile and has leveled out. Lately, I’ve been doing stock searches, but with little luck in finding anything compelling. I’m not crazy about any of the sectors or even the market right now. The only good thing about Snapchat (ticker symbol: SNAP) is that it’s trading on its own page because it’s brand new.

So, I did what a fan with a trading account would do: I bought some shares.

 

snap

Snapchat’s price history charts on freestockcharts.com

I don’t know if Snapchat has ‘found a bottom’ yet or not as it’s too soon to tell. I took a small risk with just a few shares in case this stock were to go lower. I know the proper thing to do is to trade with more information. It’s better to wait for a pattern setup on the daily chart, but there are only five daily candles to work with so far, so I’m forced to look at the hourly and 15-minute charts. I used the 5-minute chart to time my entry, which is such a day trader thing to do.

After enough time passes and I see how SNAP performs against the market and the tech sector, I’ll buy more shares once I see my typical consolidation pattern setup on the daily chart.

 

The Transparent RRSP: Post #5

Actions Taken the Week of January 30th

  • Deposited $150 into the RRSP, which now has $1316.50

The RRSP’s only security so far is ZPR, my ETF darling. It has been steadily going up since I bought it at $10.86. It’s up 0.34 cents as of yesterday, making me $16.50 so far (after paying 0.50 cents in commissions). I have yet to receive my first dividend payment from this stock, but it’ll come soon.


zpr

The charts for ZPR still look healthy. I can’t help but think I should have bought 75 shares instead! The idea was that I wanted to find another stock to invest in late January, but I just didn’t find anything suitable.

The best charts for the right prices were in the gold sector. For me, gold is more of a swing trade to actively watch – I didn’t feel that would be a suitable choice for new investors. I recognize that gold is considered a hedge if you anticipate a drop in the market. After trading gold and silver for years, I can tell you that the market going down isn’t a guarantee that gold stock prices will go up. Commodities aren’t always the easiest trade. So much depends on the supply and demand in their own markets where people actually buy the raw or processed materials.

I’m not saying to not invest in gold or silver stocks. I just think it’s better to start diversifying when you have more money and own enough of the standard securities to give your portfolio a solid foundation.


Another thing I’d like to mention is to never lose sight of your goals. It’s a big mantra of mine. I tell that to myself all the time, particularly when times are challenging.

I’m in the Florida Keys right now on a short vacation. It’s hard to beat lying in the sun, reading, napping, drinking, and just totally recharging. I want my retirement to have plenty of days such as this. As sad as I am to leave this  wonderful place, I’m more motivated than ever to make this goal a reality.

Earnings Seasons for Stocks

There are a few things that can rock the stock market positively or negatively: a major world event, a major company gets caught up in a scandal, election results, or company earnings.

Four times a year, publicly traded companies announce their quarterly earnings results. Some companies (like Apple) are such sector and market giants that their earnings will affect the whole sector – and sometimes entire market.

Earnings season definitely adds an element of uncertainty. If a stock you’re interested in buying is scheduled to report its earnings, buying it beforehand could work for or against you in a big way. Suddenly it feels like you’re placing a bet instead of making an investment.

It’s great if it gaps up in price. Your portfolio will glow thanks to this stock’s incredible move. You’re an amazing investor and have become unstoppable at picking stocks. It’s in your destiny to be the sage investment advisor among your peers.

If the stock gaps down, the feeling is the complete opposite. You’ll be spending your time looking into why the company had good earnings, yet it still came down hard in price. What horrible luck were you just cursed with?

Financial analysts are always trying to predict the earnings results of major companies. What happens then is that traders start to take their positions and buy shares in anticipation of the price going up in a big way. When the actual earnings report comes out, if the predictions were correct, the price usually goes up by a lot because other investors who were waiting on the sidelines are now acting on the correct information. If the predictions are off by a lot, it can send the share price down – even if the company had a better quarterly earnings report than the analysts predicted.

This doesn’t seem to make sense until you start thinking about the psychology behind pricing. There is one thing you should never lose sight of: Stocks move in price based on investors’ perceptions. Analyst predictions are important because they shape people’s perceptions on what they think is a fair price for shares. So, even if the earnings are predicted to be weak earnings, investors can decide on what is a fair share price based on those predictions. People like predictability, even if the information isn’t always good. We don’t like unpredictability because it increases uncertainty. The root of risk lies in uncertainty. 

If you’re planning on buying a stock that has yet to report its quarterly earnings, you can either wait until after its earnings report comes out, or just buy a fewer number of shares to lower your exposure to risk. Sometimes, after an earnings report, the share price stays the same. If it’s higher or lower in price by a significant amount, then I recommend waiting until it settles down before buying more shares. Any big move will trigger a lot of action before it gets quiet again. The trading volume will eventually go down and the daily price ranges will go back to being average. Refer to any of my lessons on price consolidations under the category, “How I Find and Pick Stocks.”

If you own a stock for a while, you’ll know that the big ups and downs from earnings come and go like the seasons of the year – it does happen four times a year, after all! You need to recognize that you buy a stock for more than just its quarterly reports. You invested in the company because you like its product or service, its sector, its dividend, and hopefully, the low price you got it at (thanks to all the techniques I’ve been trying to teach you!).

Canadian Stocks $10 to $20

This is a continuation of last week’s picks taken from the XIC ETF, only this post focuses on stocks between $10 and $20.

Some of these pay dividends. I’m only making special note of the ones that pay monthly because personally, I’m very drawn to the concept of investment income coming in more frequently. Some of the others listed pay quarterly, and some none at all.

Remember to please always double check the facts for yourself and invest in accordance with your plan. Factor in the stock’s industry/sector, and consider whether you’re investing for income, capital gains, or both.


Top Picks Based on Chart Patterns 

  • ATA – ATS Automation Tooling Systems
  • GEI – Gibson Energy Inc.

Stocks with so-so looking charts but very attractive monthly dividends

  • SPB – Superior Plus (I own this stock. This one could take a LONG time to get beyond the $15 zone but it’ll be well worth it if you’re already in and it does.)
  • VSN – Veresen Inc.
  • RNW – Transalta Renewables Inc.
  • CHE.UN – Chemtrade Logistics Income Fund (This is an income fund.)

Stocks that I’d prefer to consolidate longer

I think these should consolidate for a bit longer, like another one to two months. I mention them now because I think it’s good practice to keep an eye on stocks should they set up later on. 

  • HSE Husky Energy Inc.
  • SES – Secure Energy Services
  • INE – Innergex Renewable Energy Inc.
  • CUF.UN – Cominar Real Estate Investment Trust (This is a REIT.)

 

Things to Ponder

I have missed out on stocks that made incredible moves despite the lack of a good setup and I still do. I also missed out because I just overestimated how much time a stock would take to come around. I’m okay with this now because part of my confidence as a stock investor with a 70% return on my portfolio comes from the following:

  • Looking for and waiting for good setups
  • Taking lesser risk on stocks with less-than-perfect setups by using fewer shares
  • Watching the sectors and the market
  • Having a plan for each stock (dividend income? swing trade for profits? retirement? portfolio diversification? hedge?)
  • Being okay with missing out and not getting into everything that looks good or works
  • Years of experience in the markets

I generally have a relaxed attitude towards my portfolio and how I select for it. If I start making compromised choices, I get stressed out and I either talk myself out of staying in a winner, or I get into something much too late because I spent too much time overanalyzing its potential.

You shouldn’t invest feeling fear, whether it’s the fear of starting out or the fear of missing out (FOMO). If you’re new to investing in stocks, just use less money. If you feeling a bit of FOMO, then you must realize that the stock market isn’t going anywhere and that there will always be another opportunity when you’re more ready.

Stocks Under $10 – January 4

Happy new year!

Last night I printed out a list of TSX stocks held in the XIC ETF and I went through the ones under $10. I used freestockcharts.com to review the price history charts. My selection is based purely on price charts, consolidation, and volume. No one’s paying me to call out their stocks. I also didn’t perform any analysis on the fundamentals of each company. I love good charts, so this is a list of some good-looking ones.


Top Picks 
  • TRQ – Turquoise Hill Resources Ltd.
  • SSL – Sandstorm Gold Ltd.
  • LUN – Lundin Mining Corp.
  • KEL – Kelt Exploration Ltd.
  • IT – Intertain Group Ltd.
  • PD – Precision Drilling Corp
  • TA – Transalta Corporation
  • TOG – Toro Oil & Gas Ltd.
  • AIM – Aimia Inc.
  • MEG – Meg Energy Corp.
  • EXE – Extendicare Inc. (I already own shares of this one)
Decent Charts
  • WEF – Western Forest Products Inc.
  • ECN – ECN Capital (this is a newer stock)
  • SGY – Surge Energy
  • SPE – Spartan Energy
  • NSU – Nevsun Resources Ltd.
  • AAR.UN – Pure Industrial Real Estate Trust (This is a REIT)
  • NG – Novagold Resources Inc.
  • HBM – Hudbay Minerals Inc.
  • JE – Just Energy Group Inc. (This is an income fund)
  • MRE – Martinrea International Inc.
  • ESI – Ensign Energy Services Ltd.
  • DRG.UN – Dream Global Real Estate Investment (This is a REIT)

Some Things to Note

It looked like most of the picks were from the mining sector (mainly the golds) and from the energy sector. Looking at the gold ETFs, I really can’t tell if they bottomed long enough (think longer consolidation) to trigger a substantial bull run (bull, bullish = positive moves up in price). Although there is a hedge component to investing in precious metals should things go badly in the markets, you can still experience volatility with commodities. If it pains you not to participate in the potential gold rush (think swing trade, not super long term), then you could get in with fewer shares and consider managing your profits, i.e. moving your stop (your selling price) up as the reward doubles, triples, etc.

The energy sector, specifically oil, could make for a good swing trade, if not, then maybe for the longer term, for as long as oil keeps going up. Even though Trump could threaten trade with Canada, if oil goes up, this could be the trade that’ll boost your portfolio’s growth.

Some of these pay a dividend, some of them don’t, or recently stopped paying one. If you’re going to invest, please do your research and decide what you’d like the stock to bring to your own portfolio. Are you looking for a swing trade? Long-term growth? Income? These are some things to think about.

My Little Reminder/Warning

Please don’t just buy because it’s finally time to and you feel you can follow someone who seems to know what she’s doing for herself. We all have different capacities for risk and I fall into the category that falls under “aggressive!” The outcomes of my own investment decisions fall on me, just like they will for you. Know what you want for yourself and invest at your own risk!

Some More on Sectors

Rack

My closet, the retail sector.

How I Stumbled Upon Sectors

With investing, I try to think in terms of the big picture. I find it useful to be aware of the moving parts within this picture. When I started to learn about stocks, I was clueless. I couldn’t read a financial column. JP was reading the Wall Street Journal and he had to translate everything for me. At that point, I only understood how a stock worked and what a brokerage account was, but that was it. I had taken courses in business, accounting, and investing, but so much of it went over my head. I just had a lot of different information floating about and not enough experience to apply this information as a novice trader.

I decided to take the Canadian Securities Course to get a better idea about the financial industry, investments, how they work, what professionals do, and what investors need to know. It was great because I could go at my own pace and get more into the stuff on equities. I honestly can’t say studying for the exam was loads of fun, but I was happy enough to pass. I loved that I ended up with a better idea about the workings of the financial world and Canada’s economy.

The more I learned about investments, markets, and the economy, the more fascinating money was to me. I became more aware of the psychological component with money, spending, saving, and investing. There is nothing static about the markets, the spending trends that drive the economy, the saving spells that slow it down, and particularly the movement of money between the different sectors and industries.The market is constantly in flux because it’s made of many different components that drive these fluctuations. Money is always being made somewhere.

One of the most important things I learned is that getting a good read on the economy will help you make better investment decisions. Having even just a basic understanding of the economy can make the difference between a novice investor and a savvy one. I found that watching sectors has helped me make money in the short term and longer term. Sector watching can also give you some idea where the overall markets might be headed towards. Sector movement can help determine why a market is up or down. Understanding sectors is important enough to me that I discuss them along with the economy in my book, Loonie to Toonie.

One of my readers seems to share my interest in sectors and has been asking me about where to find more information on them. I’m happy that she’s recognized the importance of understanding sectors and wants to do her own sector research.


Some Places to Look Up Sector Performance

Click here for a great list of sector indexes that track TSX stocks. If you click under “Symbol,” you will be taken to the index’s chart. You can select the time frame at the bottom of the chart. I suggest looking at the 1-year chart, or even longer. I find that longer time frames provide better insight on overall sector performance. For U.S. indexes, you can find a handy sector list here.

I’m often stalking stocks and looking for new ones that might possibly make a move in the near future. As I mentioned in a previous blog, “Stock Picking – Part 3: Factoring in Sectors and the Market,” I look at stocks, their respective sectors, and the market. It’s easier for me to just type in a sector index’s ETF symbol when I’m on my charting screens.

One thing to note: ETFs don’t always move in sync with their corresponding indexes because ETFs are actively traded on the exchanges. Sometimes ETFs will move more or less than their index as it depends on the trading volume and demand, or lack thereof. Having said this, looking at the sector or market indexes will provide a more accurate picture than the ETF. I’m super lazy, so it’s easier for me to just type in a sector ETF that I’m familiar with if I’m just looking on my phone and I’m not on my trading platform at my desk.

Reports on Sectors and the Economy

Economic reports happen every day. Some get more attention than others. The more important the report, the more effect it’ll have on the markets. Some of these reports are sector-focussed. Some sectors give big clues as to where the market could be headed. For example, a strong economic report on new home sales could indicate an optimistic economy and stronger retail sales. I always look at the US economic calendar to see where there might be a lot of action or potential change in the markets. To know what these reports mean and their significance, click on “Event Definitions.” Here is the Canadian economic calendar and here is the international economic calendar. Many different financial websites have economic calendars, so find ones with formats and reports more suitable to you and your interests.

Media

I sometimes watch CNBC and BNN because I like to listen to industry folks. I could watch that stuff all day (especially CNBC’s Fast Money as they’re traders who sometimes have highly entertaining arguments!). There are always so many different points of view on stocks, sectors, and the economy. There are a lot of opinions out there, many of which are conflicting, but these provide additional context to the charts.

If you read any financial paper, newsreel, website, or blog, you’ll also find a lot of up-to-date reporting on micro and macroeconomic stuff. The news often discusses the employment situation in certain industries or businesses. Consider your own job and the industry you’re working in. You might be able to see where you can be headed career-wise if it’s a growing or steady industry. Look at your bills and see where you’re paying the most. Maybe it’s in a sector that you should invest in. Sectors are out there and also are very much a part of our everyday lives. We know more about them than we might be aware of.


I’m sure my rudimentary research methods would make any financial professional shake his or her head!

As important as it is to know about sectors, there is no exact science in applying this information. It’s just one aspect of financial understanding. Some of your best investments will be so long-term that they will endure decades of economic fluctuations and sector cycles.

In the spirit of being financially literate, understanding sectors and their relationship with the economy will make you more financially fluent. That is how more of us can engage in the important conversation on financial matters.