The Transparent RRSP: Stock Picks

Action taken the week of May 29
  • I deposited $150.00 into the RRSP account. There is now $169.90 of available cash in the account.

I’m still waiting to see if the Canadian market will have a more definitive correction than what it gave in May. It could set up over the next few weeks/months for a new run, but I doubt it. The monthly chart looks like the market is inching downward. I still would like to see the market come down to the same level it was at in mid-November.

With the lower trading volume during the summer months, I put less emphasis on the market (as long as it’s not making any extreme moves that invite concern or attention) and I pay more attention to individual stocks that are getting a lot of action. I might casually pad my trading accounts now and then with extra cash so that should opportunities present themselves, I’m ready to take action.


Some Stock Picks

I found some stocks with nice charts, some of which are seeing a lot of recent action in price moves and trade volume. These have been trading better than the market – which doesn’t say much.

  • BBD.B.TO – I don’t like that Bombardier has gone straight up the last two weeks, but it’s been stronger than the market. I would prefer a correction on the daily time frame. It’s worth watching as the weekly chart is promising with a breakaway candle that held strong with increasing volume. I’ve owned this stock since early February 2016 and I can tell you that it’s not much of a mover. This can be a good thing when this stock experiences volatility because it’s less of a shock to your portfolio (unless you have a lot of shares and took on too much risk). While the monthly chart is very nice, the yearly chart is not inspiring.
  • BTO.TO
  • HGU.TO (This is a gold ETF.)
  • TD.TO
  • MG.TO
  • RY.TO
  • NA.TO
  • TA.TO – This is already in the RRSP. I was beyond busy this week and I wish I had a chance to look at the chart earlier this week. Depending on what it does next week, I might buy more shares.

If you’re not inspired to take on any risk, you can just watch these over the next few weeks and months and see how they do with or without the market. If you do feel inspired to trade, I’d recommend taking on less risk and buying fewer shares. I only say this because I still think the market will correct further and this could take down your stock and it could be a while before it starts to improve.

As always, please keep in mind the industry, sector, the company and its fundamentals, any recent news, upcoming earnings announcements, the amount of risk you’re taking, how it fits within your portfolio, your anticipated time horizon, etc. It’s always important that you look into what you need to in order to feel confident in your investments.

The Transparent RRSP: Month-end Market Read

Action for the week of April 24
  • I transferred another $150.00 to the RRSP account’s current cash of $29.90, which will give me $179.90 for the month of May.

I also didn’t do anything for the RRSP last week (the week of April 17). I mainly sold more shares of other stocks in my TFSA. I was feeling exposed having so many stocks at a time that I feel the market is going to have a correction. The fact that I still have 28 stocks in this account is still a head-scratcher. I managed to make a decent profit on some of these, so I’m sitting on more cash than I have in a long while.


Marks

The XIC and SPY ETFs on freestockcharts.com

The Canadian Market

You can see on the XIC that the Canadian market has just been trading sideways. At the time of writing this, there still remains one more trading day this month. There is usually a lot of selling at around month-end mainly because funds are re-balancing their portfolios for cash to pay investors. So, it remains to be seen how we’ll close, but I don’t think it will be too far off from where we closed last month.

The Canadian market has been lagging the US market this year so far. It’s not a surprise. Check out the two bottom charts where I drew the circles. Upon quick visual inspection, you can see we covered way more distance in 2016 than the US market. We (our economy and our loonie) got beat up so badly from the underperformance of oil/energy in 2015, that we had so much room to climb up and recover. And that we did. Our sectors in energy, mining, and finance gave great performances.

Every good run needs a break to slow down and catch its breath. If I want to find out what is making the market do what it’s doing, or where the market could be heading, I will look at the major players. I’ll either check out the sector ETFs, or the biggest companies in the influencing sectors.

For this scenario, I’m keeping an eye on the banks, all of which are in the process of a correction. It could be just a bit of a selloff, or it could be a substantial selloff that will keep going until mid-late summer or fall. Now, don’t go on selling your dividend-paying bank stocks – I’m just saying keep an eye on them if you want to have a better gauge as to where the market is going.

I will suggest that if you’re interested in accumulating more shares in bank stocks, you might want to wait a while for the prices to come down more and have settled down for a bit before going up again. I am a huge fan of waiting for new buying opportunities and I will wait months, even years, to get into good stocks.

The US Market

I can’t invest or trade or think anything stock-related without looking at “the SPY,” the most popular American S&P 500 Index ETF. It’s more out of habit having used it so much for day trading than it is out of necessity. I look at it to get the feel for the market, its momentum, and its sentiment. It often is quite off from the actual S&P 500 Index, but it’s where the action is at. This is where I discovered the importance of monitoring trade volume.

I never look at the SPY without looking at the QQQ, the NASDAQ Index ETF. Plus, I never look at “the Qs” without looking at some of its big players/action stars: Apple, Microsoft, Facebook, Google, etc. I attribute the US market’s most recent run, not as much to its new president (but I’m sure he’ll take full credit for it, very true), but to the technology sector. I’m sure this would stir a lot of debate, but I’m speaking from an on-the-ground perspective because I own a few tech stocks.

The tech sector has been the leading sector over the last year, so it’s important to keep an eye on it along with its biggest stocks. You can watch the Qs and the tech ETF, XLK and the semiconductor ETF, SMH. When observing the big players in tech, look out for shifts in volume and ask is the buying volume is lessening? is the selling volume increasing? or whenever the prices drop, is there a lot of buying or just a little?

I would also be watching the US financial sector’s ETF, XLF. Like Canada’s, the US financial sector has been pulling back the last couple of months. If tech starts to come down along with the financials, then I’d expect a more prominent correction in the US market before more new buying opportunities start presenting themselves again.


This is my process and how I see the market. I’m always trying to find clues that indicate optimism (buying), euphoria (heavy buying with big price moves), panic (heavy selling with quick and large drops in price), pessimism (selling), or neutrality (lower volume, sideways trading).

I still hear over and over that timing the market is useless. I don’t look at it as ‘timing’ because it’s not a science, nor is it something you can accurately measure. It’s more about reading the market. Investors’ feelings and sentiment move the markets, not numbers. I hope that one day, more people will see it this way and learn how to invest with the flow.

 

 

 

 

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.

 

The Transparent RRSP: Market Analysis

No action was taken the week of March 27

I have been busy looking for good picks. I found one, but it’s too expensive for the RRSP. If I had more money in this account, I would have bought shares of Bell Canada Enterprises (BCE Inc., ticker symbol BCE.TO). Instead, I bought BCE for my TFSA. It had a nice setup of sideways trading starting from November with a tighter consolidation forming this week. It also pays a great dividend.

Bell is my service provider for internet connection. Thankfully, I don’t have the headache of dealing with them, JP does all of that. He has the patience and persistence required to get the service we need. This week he also managed to get our monthly rate reduced – yet again!

I’m not too concerned with how this stock moves in price as this is a pricier stock. If it goes up, then I’m glad I got some shares at a lower price when I did. If it goes down, then I’ll wait for a good time to take on more shares. Whether it goes up or down a lot in price, I will always wait for a setup before getting more shares. That’s just how I roll.


Now it’s time for some market analysis. I’ll use my favourite ETF, the XIC, to figure out what’s going on with the Canadian stock market.

xic

XIC stock charts on freestockcharts.com

1. The daily chart shows the market has been moving sideways for all of March. If you look at the trade volume, you can see that there has been a bit of a tug of war between buyers and sellers.

I believe this push and pull happens because people get nervous when the market feels a little toppy; as I said early on this month, it’s gone straight up for much too long. I wanted to finally see a bit of a pull back in the market because I expected people to be taking profits after a six-month run. I’d much rather take new positions after the market sanely resets itself than to follow a euphoric run that doesn’t stop or pause for air.

2. The weekly chart provides a cleaner and clearer view of March’s action. I like bigger time frames because they have less noise than smaller time frame charts. The candles on this chart cover a wider price range than previous candles. Wider candles mean more volatility and uncertainty. The volume week-to-week shows buying, selling, buying, selling, then more buying in this final week of March.

There could still be yet a further correction in early April. Whether this happens or not, what I’d like to see is the price range tightening up before the market goes up again. Tighter trading ranges typically mean greater consensus among investors. The volume week-to-week should also be mostly green to signify more buying is happening.

3. The monthly chart finally gave me the candlestick bar ‘pivot’ that I wanted. It went below February’s price low of $24.32 and down to $24.24 this week. I like pivots because they’re a more distinguished correction on a price chart. I like to think of them as a likely turning point. 

The arrow on the monthly chart points to a lot more trade volume this month than all the previous months. Interestingly, the last time it saw trade volume to this level was in March last year. This big volume bar is green, so there was mostly buying this month. Based on my rough observations in the market day-to-day, I saw a lot of accumulation action in the metals, particularly in gold.

___________________________________________

Will the market go down again? Yes, but I think it will in the summer. Historically, the market either stays where it’s at for April, or it goes up a bit more. This generally happens because of earnings season and it’s the investors’ final run at making profits before things slow down in the summer. Also, with all that buying this month, if gold makes a bullish run for it, this will also send the market up.

As the saying goes, “Sell in May and go away.” Something out of the ordinary will have to occur to break this typical cycle.

 

The Transparent RRSP: More Thoughts on the Market

I posted on Monday that I had bought another 16 shares of LFE.TO at $6.12. This cost me $97.92 + 0.16 of commission. I now have $60.90 of cash remaining in my account. This was at the same price I got the previous 24 shares of LFE.TO at, giving me 40 shares of this stock.

Currently, I’m not crazy about entering any new positions given the market. I would prefer it to have a more substantial correction before it resumes going up. My preference would be for the market to just slightly sell off below February’s lows. The market could just move sideways for the rest of March, which I’ll be satisfied with. If the market isn’t going to have a correction, then it at least needs to take a break from going straight up.

When the market is operating near a peak like this, I tend to find that stocks with great setups are merely shortlived opportunities in that they might only be in the profit zone for a few days – then people get scared at the slightest hint of a reversal and sell their positions to take their profits.

Another thing I find when the market is iffy: investors tend to gravitate towards stocks doing their own thing regardless of what the market is doing. That is the only reason why I bought more shares of LFE. I said earlier this month that I didn’t want to take any new positions for the RRSP until the market had a decent correction. This stock was resilient during some market weakness and looked like it was taking off.

When I am doing something that goes against my intentions, I have to ask myself, “If this stock takes off without me, will I be upset?” Some setups are dodgy enough that I wouldn’t have regret even if it works because I’ve learned that if I took such setups every time, I’d have consistently worse returns. The setup LFE was demonstrating is the kind you just can’t ignore.

Below is a comparison of the daily and weekly charts of LFE to one of my favourite market index ETFs to watch, the XIC. I also watch the actual TSX Composite Index, however, I prefer looking at the XIC because I get a better view of the trading volume in the market.

lfe

I haven’t lost sight of the increased amount of risk when taking trades in a market like this. I feel that LFE will trade on its own page for a while. Eventually, it’ll likely be more affected by the market. Hopefully, that happens when it’s at a much higher price!

 

The Transparent RRSP: A Quick Update

Action Taken the Week of March 13

It’s really hard to schedule my blog posts because it’s just as hard to schedule opportunities! I much prefer to write about the Transparent RRSP towards the end of the week after watching the markets for the week. I will do another post either this Thursday or Friday. I just really wanted to share this recent trade in case others might want to consider this opportunity.


 

 

LFE2

LFE charts on freestockcharts.com

 

After I first bought shares of LFE.TO, the stock went up only to come down again and consolidate longer. I loved how the range got tighter and held up beautifully – while the market during the same time came down. It always gets my attention when a stock holds stronger than the market. It’s now trading above all the previous prices in this consolidation. Could this be taking off?

The Transparent RRSP: The Investor’s Mindset

No Action Taken for the Week of March 6

Let’s have a gander at the charts for the stocks in the Transparent RRSP.

 

4 charts

Four weekly charts on freestockcharts.com

 

The charts for LFE and GRL still look good. LFE is particularly nice in that it held up strong yesterday, despite a big down day for the market.

ZPR could use a correction. I’d like it to either go sideways or have a tiny selloff (hopefully, no lower than the $11.00 area) before going up again.

LIQ got ‘wasted’ on their earnings report yesterday morning, but the fast drop was followed up by some serious buying. Seeing volatility like that can be a little thrilling (for me, at least). A shakeout like this is called capitulation. This is when sellers get out in large numbers due to panic. The stock dropped off the open and went up for the rest of the day.

Whenever a stock trades like this at an abnormal price range and trade volume, it attracts the attention of many: the media, scared investors, and traders who are watching for a potential buying opportunity. I’ve lived through enough earnings/news shakeouts – my biggest regret for most them was abandoning my positions. This is because usually after enough time passes, there was almost always a recovery. I’m going to hold on.

As I mentioned in last week’s RRSP post, the market is in need of a correction before investors can feel confident in taking new positions or adding to their current ones. Remember, I only just entered these positions in the last two months; when you buy a stock at a time when the market is nearing the end of its shorter-term trend, you can face a bit of turbulence while the market either levels out or has a bit of a selloff. I’ve said it before: selloffs are temporary and often short-lived. When the market resumes its uptrend, all you can do is hope that your stock either follows the market or will have started going up before the market gets going again.


The Investor’s Mindset

Investors feel confident when they’re right. If you buy a stock and it’s positive, then you feel like a top contender for Wall Street’s Got Talent. You look for more stocks to buy or you buy more shares of the same one. A rising stock within a rising market is positive feedback and confirms that you made the right call.

If you buy a stock and it’s negative and lower than the position you took, you start frantically looking for reasons that explain where you went wrong. There will always be reasons to support why you’re making money as well as why you’re losing money. The problem with human psychology is that we tend to focus on losses and failures more than our successes and long-term progress.

Losing something is often a traumatic experience for us. We withdraw and try to rationalize why it happened and what could’ve been done to prevent it in the first place. Just watch an athlete on a streak make one mistake. The athlete who recovers quickly and keeps at it like nothing happened conquered that hit on the ego by staying focussed on the goal of the game, not the hitch. (If you’re interested in this high-performance mindset stuff, read The Inner Game of Tennis by Timothy Gallwey.)

This doesn’t mean I stick my head in the sand and ignore all the signs saying to cut my losses when I should. I just need more information that’s relevant to me and my plan. I didn’t become a good trader/investor until I truly accepted the ups and downs that come with trading. It has taken me years to get comfortable with that. I’ve read countless books on trading and psychology to see if I was missing something in my mental processes. What I realized was that I was denying myself the joys and rewards that come from being patient.

I discovered the importance of having plans for your trades. Writing it down helps to remind you of your original intentions. (I’m getting better at this. No more loose post-it notes!) If you start getting antsy, then review your plans to see if you’re still on track with your short and long-term expectations.

Have a plan, stick to it, learn from it, and get confident!


The Transparent RRSP: Market Timing

Action Taken for the Week of February 28th
  • Deposited $150.00, giving me $150.48 of available cash in the RRSP.

At the time of writing, the net equity in my account is $1771.02. I’ve contributed $1750.00 in total to the RRSP. I’m up $21.01 so far. $2.10 of that is from a ZPR dividend payment received in early February.


The Canadian market has gone up six months straight. The U.S. market has gone up four months straight. On top of that, the trading volume has declined – a sign of the market running out of the steam needed to keep going straight up. There is nothing I would love more than for the market to have a little correction – that is, a little selloff – before going up again for another leg. I would feel more confident in making a new trade if this happened.

 

tsx

The S&P TSX Capped Composite Index Fund ETF chart on freestockcharts.com

 

 

spy

The S&P 500 ETF Trust chart on freestockcharts.com

 

Market timing means timing your trade entries and exits with the stock market moves. It’s more of a shorter-term strategy. When the market is on its way up, you buy. When it begins its move down, you sell.

A lot of people rag on market timing and its futility. I don’t blame them. It’s not easy to estimate and it’s impossible to be right and exact all the time. On CNBC, the analysts and traders always goad each other into making short and long-term predictions and when one is right over the other, they really rub it in! It’s pretty entertaining. It doesn’t really matter because, in the long run (we’re talking years), the stock market generally goes up as it has historically for decades upon decades. Why is this so?

Investors, by nature, are optimistic. You invest because you believe there’s a decent chance you’re going to make money. When optimism shifts to pessimism (due to recessions, world events, interest rate hikes, etc.), investors sell to take their profits or reduce their exposure during a downturn, or as in my case, hold off on making new investments.

So what happens if your market timing is off? Well, if you bought at the height of action before a turnaround, you’ll just have to wait until you’re back in the positive. No matter what, don’t panic. These downturns are more temporary in nature.

There are ways to be impacted less by market timing. The general goal is that over the course of your life as an investor, you’re accumulating assets and creating a diverse portfolio. If your portfolio is diverse enough, a part of it should be performing better than the other part of it during a market dip. When the market is strong again, most of your assets should be doing well. Then, you’ll eventually get rid of the ones that don’t meet your minimum expectations regardless the market and sector. After years go by, you’ll be beyond caring about market timing as most sound securities pass the test of time and should increase in value.

Why do I care about market timing? I simply prefer to take positions at the start of the uptrend. I learned to look for signs that a trend might be tiring out and if I do enter a trade, it’s with fewer shares and moderate expectations. I watch the market enough that I’m able to pay attention to where I’m positioning myself within the trend (at the beginning, mid-trend, near a top).

Before taking another position for the RRSP, I’m going to hold off until later in the month to see if there will be a correction, or if the market will take a bit of a breather that will be more apparent on the shorter time frame of the weekly chart. The only way I’d break this commitment is if I saw a perfect setup (to-die-for charts on all time frames, volume action, sector making a new move, and the market had sold off, yet the stock wasn’t affected).

This is actually a good time to look for stocks in the middle of setting up. That way, I’ll be ready with options when the timing is better.

 

 

 

The Transparent RRSP: Post #8

Actions Taken the Week of February 20th
  • Bought 24 shares of Canadian Life Companies Split Corp. (ticker symbol: LFE.TO) at $6.12 per share on Wednesday, February 22.
  • This cost me $146.88 plus 0.24 cents of commission.

I had S147.60 left in the RRSP so I couldn’t afford to buy 25 shares, which would have made it a better bundle to manage. When you buy shares in ‘odd lots’ (not by the 100s), you sometimes run the risk of your order not all getting filled at the very price you want; or if you pay higher commissions per transaction, you will get better value for your trade costs when you buy in round lots of 100 shares, 200 shares, 300 shares, etc.

Times like this make me feel like a teenager who spent the rest of her allowance too quickly (only here I didn’t blow it all on bubble gum and nail polish). I now have 0.48 cents left in my RRSP, which means it’s definitely due for a re-up. To stay true to my commitment of regular monthly contributions, I will deposit another $150 at the beginning of March.


I found this stock when I was perusing the ‘Canadian Common Stocks’ tab on freestockcharts.com on Wednesday morning.

lfe

LFE.TO on freestockcharts.com

 

Even though the monthly chart wasn’t my ideal setup, the daily chart was too nice to pass up. When you see a three-month long consolidation with that kind of volume action, you pay attention. This could still consolidate longer, which means I might have to sit uncomfortably for a while, but if this continues to tighten up, I will buy more either in my RRSP (when I’m better funded) or my TFSA – or both.

Also, this investment company is a portfolio of four major life insurance companies, so if you can’t afford to buy shares of those individual companies, you can of this one and receive a nice monthly dividend to boot!


Don’t forget the RRSP deadline of March 1, 2017!

Claim your RRSP deductions and get a bigger tax return!

And when you get your tax return, invest it!

The Transparent RRSP: Post #7

Actions Taken the Week of February 13th
  • Bought 50 shares of Global Real Estate Dividend Growers (ticker: GRL.TO) at $7.74 per share on February 14th
  • This cost me $387.00 plus 0.50 cents commission

I now have $147.60 remaining in my RRSP left to invest. If I don’t find anything cheap enough to invest in, I’ll probably wait until my next regular deposit of $150 in the first week of March before I can afford to buy another stock.


 

grl

GRL’s Price History Chart on freestockcharts.com

 

I personally like the newness of this stock. The lowest it’s ever been is $7.30, so buying it 0.44 cents above that seemed like a good deal to me, especially if it goes up from here. It’s possible this can still go down to the $5 area. Stocks tend to test major price points of $5 multiples. If this doesn’t go down, then the first target area would be around $10 where there’ll be some profit-taking and then some more buying before going up even more.

I really liked this chart; although I will admit that my entry was aggressive and possibly premature. What I’d love to see this stock do is continue to trade in the $7.50 to $8.00 range. If this consolidates for another month or two in this area, you can bet I’ll be buying more shares before it breaks out. What’s also great is that this stock pays a monthly dividend of 0.05 cents per share.