Stocks were disappointing over the past week, with the TSX 60 having fallen 1.9%. A pullback is nothing to worry about after three weeks of strength. Stocks continue to outpace bonds, still showing more promise for the immediate future. Strangely, gold (IGT) has greater momentum than either stocks or bonds. My asset rotation model, however, assigns the highest rating to US small caps (IWM).

The stock market continues to appear over-valued, but earnings reports won’t start to be announced for Q3 until the second week of October. At that time, we’ll get a better idea of how companies are faring in response to recent economic conditions. While the economic stimulus promised by the Americans excited the market, the thought of earnings reports seems to be bringing investors back to ground.


Market Outlook September 24, 2012

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