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3 top picks from Getting Technical’s Bill Carrigan

Bill Carrigan.

Kevin Van Paassen/The Globe and Mail

Bill Carrigan is a technical analyst at Getting Technical Info Services. His focus is on technical analysis.

Top picks:

iShares S&P/TSX Venture Index Fund

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iShares S&P/TSX Capped Energy Index Fund

Martinrea International Inc.

Past picks: Sept. 21, 2012

iShares S&P Global Timber & Forestry Index Fund
Then: $41.25
Now: $48.90
Total return: +18.60 per cent

BMO S&P/TSX Equal Weight Global Base Metals Hedged to CAD Index ETF
Then: $13.23
Now: $11.57
Total return: –11.57 per cent

BMO S&P/TSX Equal Weight Banks Index ETF
Then: $17.49
Now: $18.74
Total return: +9.74 per cent

Total return average: +16.77 per cent

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Market outlook:

The current "rebound bull" is about 48-plus months or 1,500 days old. The previous rebound bull of 2002-2007 ran for 60 months. A rebound bull is a powerful linear advance that follows a "granddaddy bear" such as we had in 2000-2002, 2007-2009 and the crash of 1987.

Modern bulls are running longer than the historical 48-month U.S. business cycle, perhaps due to the forces of the global economy.

The current rebound bull may be predicting a global recovery, which would allow the U.S. Fed to slowly wind down its quantitative easing program. As this bull ages look for normal sector rotation to return as the global recovery becomes a reality.

The normal sector rotation order is: leading stock sectors – financial, utilities and telecom; followed by coincident stock sectors – consumer, health care, industrial and technology; and then lagging stock sectors – energy and materials.

The best strategy: Prepare for a gradual trend to higher interest rates by moving away from utilities, telecom, REITs and toward the industrial, energy and materials sectors.

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