Volatility has risen, with the VIX going from 13.99 to 16.30. This is not a predictor of anything, but it reflects fluctuations in the market. The TSX ended the week near where it began, but it bounced around in between. That is sometimes the result of nervousness. It appears that more people are trading stock, as reflected by increased volumes, however there is a buyer for every seller, so changes in volume don’t necessarily result in price movement.

Interest rates have continued to rise, resulting in losses for bondholders. By comparison, stocks appear attractive, even if they lost a little ground over the week. The point being that stocks don’t look very good, but there doesn’t appear to be anywhere better at the moment.

Further, this pause isn’t restricted to North American markets. The Brazilian, Chinese and now Hong Kong and emerging markets have all lost their positive momentum. Of the asset classes in my model, the European (XIN) and American (SPY, IWM) markets look the most attractive at the moment. But since even they are pulling back, it’s really difficult to say that it’s a good place to be. Cash might be just as good at the moment.

As they say: Sell in May and go away.

Market Outlook June 3, 2013

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