by Ryan Lewenza, VP, CFA, CMT, Senior North American Analyst, TD Wealth
Attached is our [TD Wealth's] 2014 Technical Outlook [prepared by Ryan Lewenza] where we provide our technical views for the major equity indices, sectors, commodities and currencies, and provide a list of our top technical Canadian and U.S. stock ideas.
Highlights of our 2014 Technical Outlook report include:
· The technical profile for the S&P 500 Index (S&P 500) remains very bullish, in our opinion. The S&P 500 has been in a long-term uptrend since its 2009 lows, consistently making higher highs and higher lows. We believe the S&P 500 is poised to move higher in 2014; however, we see the potential for a pullback in H1/14, before entering the seasonally strong Q4.
· From a cycle perspective, both the four-year cycle low and Presidential Cycle are forecasting modest gains this year. From a secular perspective, we believe the 13-year bear cycle for the U.S. equity markets could be over. If we are correct, the U.S. stock market could post above-average returns in the years ahead.
· Preferred U.S. sectors include the industrials and health care. At risk sectors include telecommunications and utilities.
· We believe the Federal Reserve’s (Fed) tapering of its asset purchases will lead to a stronger U.S. dollar and higher long-term bond yields. The stronger U.S. dollar could provide a headwind to commodity prices.
· The S&P/TSX Composite Index (S&P/TSX) broke above key resistance at 12,900, potentially opening the door to more upside in 2014. However, we see headwinds for commodity prices and with the resource sectors (materials and energy) representing roughly 40% of the S&P/TSX, upside for the index could be capped around 14,300-14,600 in 2014.
· Preferred Canadian sectors include industrials and financial services. At risk sectors include the utilities and telecommunications.
· The emerging markets continue to struggle and underperform relative to the developed markets. We believe emerging markets will remain range-bound and underperform the developed markets in 2014.
· U.S. stock recommendations include Huntington Bancshares Inc. (HBAN-Q), Honeywell International (HON-N), CSX Corp. (CSX-N), and Medtronic Corp. (MDT-N). Canadian stock recommendations include Manulife Financial Corp. (MFC-T), Enerplus Corp. (ERF-T), Davis + Henderson Corp. (DH-T) and Aecon Group Inc. (ARE-T).
You can read/download the entire report below:
