Markets are bouncing back all over the world... but not many like this one.
In the U.S., we've seen a fierce move higher – the S&P 500 Index jumped 11% in just two weeks. But we're still below the all-time highs of earlier this year. The same pattern is playing out in Europe, Japan, and most other major global markets.
But in one market investors often ignore, we've already seen new highs.
The pullback in Canadian stocks is officially over. The iShares MSCI Canada Fund (EWC) hit a new 52-week high last month. And that makes it one of the first major markets to shake off the uncertainty that has plagued stocks this year.
This is a big inflection point for Canada's market. It means that Canadian stocks are in an uptrend. And history tells us the gains are likely to continue.
Let me explain...
Market inflection points act as guideposts for investors. They're like "mile markers" for where stocks are today – and where they may go next.
Seeing a market hit a new high is an important inflection point. Typically, it's a bullish sign. That's because trends persist... New highs often lead to even higher highs in the short term.
That's why we want to pay attention to Canadian stocks right now. EWC is just coming off a fresh 52-week high from last month... And it was also a new all-time high for the fund. Take a look...
After peaking in November, EWC traded down or sideways for months. Then, Canadian stocks broke out to a new high in March.
We looked at previous 52-week highs to see what has happened after moves like these. History shows that these inflection points have led to outperformance...
Since 1997, buying after similar setups tends to lead to winning trades. And these returns easily beat a typical buy-and-hold strategy. Check it out...
Canada's broad market hasn't done great over the past 25 years, returning just 4.4% annually. You can do better today, though...
Similar cases have led to 4% gains in three months, 6% gains in six months, and an 8% gain over the next year. That's much better than holding and hoping the fund goes up.
Canada is one of the first global markets to climb out of the recent funk. It's at new highs once again... And it's likely to outperform over the next year.
We'll probably see many markets act in a similar way in the weeks ahead. But Canadian stocks are leading the way. And that makes them worth considering today.
Good investing,
Chris Igou
Further Reading
"You want to own stocks, despite the scary headlines," C. Scott Garliss writes. Right now, many investors are trying to hide their money as uncertainty remains rampant across the market. And this opens the door for us to make huge short-term returns... Learn more here.
Folks are scared to invest right now. But the recent choppiness in stocks won't last forever. And history shows that getting in now could set us up for massive gains... Read more here: The Music Is Playing, but No One Wants to Dance.
Stock markets across the globe are starting to bounce back to life. And one nation's market provides a great way to play the trend as the world starts to thaw...
THIS TELECOM GIANT IS LEADING THE PACK IN 5G
Today, we're looking at a powerful trend in technology...
Our digital world relies on mountains of data and fast Internet. It's why nations around the world are investing in the 5G network... which is expected to be at least 10 times faster than current Internet speeds. According to research firm IHS Markit, 5G will generate $13.2 trillion in sales across industries by 2035. That's a major tailwind for today's 5G pioneer...
Rogers Communications (RCI) is Canada's largest telecommunications company, serving more than 11 million wireless subscribers. It was the first to bring 5G connectivity to Canada, and its 5G network serves 70% of the population. But it isn't stopping there... Last month, Rogers won approval from regulators to merge with rival telecom Shaw Communications. And the two have pledged to invest $2.5 billion to build 5G networks across Western Canada over the next five years.
As you can see, RCI shares are up roughly 25% in the past year, including dividends. They also recently hit a fresh multiyear high. And as Rogers remains a key player in the 5G revolution, this uptrend should continue...
