By Sam Boughedda
Canaccord analysts told investors in a research note Monday that the corrective phase in stocks is an opportunity to add exposure.
The analysts added that the "worst-case scenario looms" and that a "new intermediate-term (1-2 month) corrective phase is attempting to take hold in most major North American equity markets."
"This corrective phase is within the context of a new 4-Year cycle (cyclical bull market) taking hold," the analysts wrote.
In the short term (one to two weeks), Canaccord sees the recent breakout above the December highs by the S&P 500 and TSX Composite as confirmation that a series of higher highs and higher lows are in place since the major market low on October 13. "This is the definition of an uptrend and supports our view that a new 4-Year cycle is developing," added the analysts.
Meanwhile, in the intermediate term (two to four months), the analysts explain that a corrective phase is attempting to take hold with "downside potential on most major North American equity indices to near their December lows."
However, the firm sees the pending intermediate-term correction as "an opportunity to add equity exposure to the developing HFL cycle."
"Our technical work remains very bullish on the developing HFL cycle (cyclical bull market), that we believe has upside out into late 2025 / early 2026. We would use the intermediate-term correction we believe is attempting to take hold to add back exposure and build overweight positions in the leadership areas of the new HFL cycle, namely Industrials, Materials, and Financials," stated the analysts.