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The Coachman's Report - TSX60 Breakout?

Well folks, yesterday US equity markets were closed due to the holiday - leaving only four days this week for buyers and sellers to transact. While historically, the S&P 500 generally performs well through the remainder of the week following Memorial Day, we feel our bearish short-term outlook for the market will hold given yesterday’s rationale.


“The more corrupt the state, the more numerous the laws.”

- Tacitus


Market Talk

Given the market closure yesterday, we’ll focus on the Canadian market in today’s Coachman’s Report - A market slated to outperform through 2022. Pictured below is the TSX60 on a 1-day bar scale since last May with the green and blue lines respectively representing the 50 and 200-day moving averages.

Unlike American indices, the Canadian market, as tracked by the TSX60 barely grazed correction territory, dropping only 11% from its highs in comparison to the S&P 500’s 20%+ correction; as such, the TSX60’s 50-day MA never crossed below its 200, which would have been a widely-regarded indication of a bearish trend. In fact, the TSX60 crossed the key 1250 psychological price level last week and advanced further above yesterday. In fact, with a P/E of only 16, a dividend yield of 2.85% and a solid exposure to the commodity market’s supposed supercycle, longing TSX60 is an attractive bet for any investor deciding on adding a broad-based market index to their portfolio.


Long: Suncor Energy Inc ($SU-NYSE) Timeline: 5-8 days

Suncor Energy is a multinational energy conglomerate based out of Calgary, Alberta. This powerhouse makes the Coachman’s trade idea recommendation today because of their strong income growth, promises to return value to shareholders, and noteworthy developments on the macro side of things. First and foremost, the fundamentals. Suncor has managed to increase total revenue by 21%, boost gross profits by 41.2%, grow operating income by 99%, and improve net income by 90% all on a quarter-over-quarter basis.

Moreover, Suncor has announced plans to buy back up 10% of the company’s outstanding shares within the next year. Additionally, as China has announced plans to curb their lockdowns, the already sky-high price of crude oil, sitting at $117.75 at the time of writing, does not seem to be decreasing anytime in the near future. Bad news for the average consumer, but as oil is Suncor’s bread and butter, it’s a solid indication to buy. As a bonus for well-timed investors, Suncor is set to announce their dividend on June 2nd, with the payout being on the 24th of June. The Technicals also support a buy as the stock is trading above all moving averages with strong momentum on its side.


Chart of the day - Household Debt Metrics

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