Let's look back on the performance of the 53 stocks submitted last year for the weekly column What the Charts Say. As usual, this report will cover a 12-month period from the beginning of December, 2012, to the same point in 2013, to allow the most recent suggestions time to mature.
Last year was a good one for North American stock markets. The U.S. market, as measured by the S&P 500 index, had minor corrections in June, August and late-September, but was positive on balance and rallied 31.8 per cent for the year. At the same time, the Toronto market, as measured by the S&P/TSX composite index, had major declines in April and June, but still managed to end the year with a 10.6 per cent gain.
Thirty-six of the stocks ended with positive results compared with only 17 losses, for a success ratio of 67.9 per cent. The average gain for all positions was 11.3 per cent. The best result was on United Continental Holdings (UAL), which appreciated 67.4 per cent for the period and the worst loss was 13.9 per cent by Ensco (ESV).
Where will the ideas come from in 2014? January was a negative month in New York and it may signal a less positive year for that market. Our more recent technical charts are signalling that the winners of the last few years may lag in 2014, as seen by the recent negative action on Lululemon (LULU), Procter & Gamble (PG), Home Depot (HD) and Wal-Mart (WMT); while some industrial stocks such as CSX Corp. (CSX), Quanta Services (PWR), Terex (TEX) and Textron (TXT) and information technology stocks such as Corning (GLW), Fairchild Semiconductor (FCS), Intel (INTC) and Teradyne (TER) may replace the laggards.
At the same time, the Canadian market may surprise, as there has been major improvement in the energy sector, where Canadian Natural Resources (CNQ), Encana (ECA), Husky Energy (HSE) and Suncor (SU) are getting a lot of attention from investors. Should the bank stocks start to rise at the same time, the S&P/TSX could outperform the S&P 500 this year.
Look for other ideas in the What the Charts Say column every Saturday.
Happy investing for 2014!
Monica Rizk is the senior technical analyst for Phases & Cycles Inc. (www.phases-cycles.com). Ron Meisels is a contributor to the www.NA-marketletter.com website and Tweets at @Ronsbriefs. They may hold shares in companies profiled. Please see the site for a glossary.