Market Call: Keith Richards's outlook on Technical Analysis (June 16, 2026)

Key Concepts

• Technical Analysis: A methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.
• Market Breadth: A technique used to examine the number of advancing versus declining stocks to determine the strength of a market index.
• Support and Resistance: Price levels where a stock tends to stop falling (support) or stop rising (resistance).
• Trend Analysis: Identifying the direction of a stock (uptrend: higher highs/higher lows; downtrend: lower highs/lower lows).
• Base Building: A period where a stock stops making new lows and trades sideways, often preceding a breakout.
• Contrarian Investing: An investment style that goes against prevailing market trends (e.g., avoiding U.S. tech while it is "parabolic").
• "Catching a Falling Knife": A risky strategy of buying a stock while it is in a sharp decline.

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Market Outlook and Strategy

Keith Richards, President of Value Trend Wealth Management, emphasizes a disciplined, technical approach to portfolio management. He notes that while U.S. markets are currently driven by a narrow group of technology stocks (AI-focused), the Canadian market (TSX) offers better sector distribution and more enticing technical formations.

• Risk Management: Richards utilizes a risk model that remains cautious on U.S. equities due to poor market breadth. He advocates for "legging in" to positions—buying in small increments (e.g., 2%) to test if a stock maintains its momentum.
• The "What" vs. The "Why": Richards distinguishes his role as a technical analyst (the "what"—price action) from his CFA colleague (the "why"—fundamental analysis). He argues that if traders do not like a stock, the technicals will reflect that regardless of fundamental optimism.

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Sector Analysis

• Technology: Richards is currently avoiding U.S. tech, labeling it "parabolic" and "overbought." Conversely, he is bullish on Canadian tech, noting that many names are currently "building a base" and showing potential for breakouts.
• Materials/Commodities: He favors materials, specifically base metals and energy. He views the current pullback in these sectors as a consolidation phase rather than a structural failure.
• Energy: Despite geopolitical news (e.g., U.S.-Iran peace deals) causing volatility, Richards maintains a bullish outlook on oil producers. He argues that even if oil prices stabilize around $80, producers are significantly more profitable than they were when oil traded at $60.

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Specific Stock Analysis

• Waste Connections (WCN): Currently in a downtrend. Richards advises against owning it, noting it has broken its previous support levels.
• Constellation Software: Viewed positively as it has stopped making new lows and is showing signs of breaking out of a base.
• West Fraser Group: A non-correlated stock that has broken out of a base. Richards sees potential for further upside if it clears resistance around $100.
• Algonquin Power: A "choppy" chart. Richards suggests it is suitable for dividend-focused investors who can tolerate price fluctuations between support and resistance.
• Agnico Eagle Mines: Currently consolidating. Richards suggests waiting for the stock to prove it can bounce off its trend line before adding to positions.
• Shopify & Open Text: Identified as Canadian tech stocks that do not meet his technical criteria for a "buy."
• Gildan Activewear: Labeled a "bad looking chart" after breaking its trend line; he advises against buying.

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Past Picks and Portfolio Management

Richards emphasizes the importance of "sell rules." If a stock violates its technical support, he sells immediately rather than "holding and hoping."

• Brookfield Infrastructure: Sold after it failed to break out as expected.
• Atkins: Sold after it violated support levels.
• Archer Daniels Midland (ADM): Held as it continues to climb in "ledges," with a target near its previous high of $87.

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Top Picks

1. Berkshire Hathaway: Viewed as an "anti-AI" play. Richards likes the diversification and the fact that it is currently bouncing off a clear support level.
2. CP Kansas City Rail: Recommended due to a clear technical breakout, signaling a change in market interest.
3. Peyto Exploration: A well-run company currently pulling back to its trend line, which Richards views as an opportunistic entry point for those who do not yet own it.

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Synthesis

The core takeaway from Richards is the necessity of emotional detachment and strict adherence to technical rules. By focusing on price action and volume, investors can avoid the "hype" of overextended sectors like U.S. tech and find value in more stable, base-building assets. His methodology relies on identifying clear support/resistance levels and being willing to exit positions that violate these technical boundaries, regardless of the underlying fundamental narrative.