How technical indicators fared in a volatile 2012

Let’s look back on the performance of the 52 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, 2011, to the same point in 2012, to allow the most recent suggestions time to mature.

2012 was a volatile year for North American stock markets. The U.S. market, as measured by the S&P 500 Index rallied 12.4 per cent to early April, declined 9.6 per cent to late May, appreciated 14.3 per cent to early September, lost 7.7 per cent to mid-November and moved up 5.4 per cent to finish the year at 1,426.18, for a 13.4 per cent gain in 2012.

At the same time, the Toronto market, as measured by the S&P/TSX composite index, began the year at 11,955, rose 6.6 per cent to late February, declined 11.5 per cent by mid-May and ended the year at 12,434 for a mere 4.0 per cent gain for the year.

There was only one “sell” recommendation for this period (BHP Billiton) and it was closed at a loss. At the same time, there were 34 positive results vs. 17 losses among the 51 “buy” recommendations, for a success ratio of 66.7 per cent. The average gain for all positions was 12.9 per cent; the best result was on Catamaran, recommended in February, which was ahead 73.6 per cent, and the worst was a loss of 18.2 per cent by Yamana Gold, first recommended in February.

Where will the ideas come from in 2013?

January was an especially strong month in New York; it could well be the harbinger for this year. The S&P 500 Index hit a 4½-year high in January and maybe ahead if itself at this time, but the strength of the U.S. market suggest further upside targets. Consumer staple stocks such as Procter & Gamble, Kimberly-Clark and Kellogg are moving to all-time highs; pharmaceuticals (Johnson & Johnson, Pfizer and Bristol-Myers Squibb) are surging ahead; and General Electric and Deere have made significant base formations to propel them higher.

At the same time, the Toronto market is still lagging, however there has been major improvement in the energy sector, where Ensign Energy Services, Husky Energy, Precision Drilling and Suncor are on the verge of new uplegs and stocks in the utility sector (Atco, Emera, Enbridge and Fortis) continue to provide leadership. Look for other ideas in the “What the Charts Say” column every Saturday.