Happy Canadian Thanksgiving. (The TSX is closed today in observance of the holiday.) We have a lot to be thankful for, specifically the appearance that we’ll get through 2013 without a painful market correction. My hope for 2014 is to experience some sustained market growth, but for now I’m content to be halfway through October without seeing stock values seriously fall.

Over the past week, interest rates rose, pushing bond values down. As a result, stocks handily outperformed bonds. As a result, stocks have much better momentum than bonds and it appears that the fast money is moving into stocks.

Between the various asset classes in my model, Brazilian stocks (EWZ) show the greatest momentum, with Hong Kong stocks (EWH) nearly as strong and US small caps (IWM) tied for second place. Not surprisingly then, the emerging markets ETF (XEM) shows the best momentum of ETFs in CDN$. What surprises me is the gap between US small caps and US large caps (SPY), the latter showing almost no momentum at all.

 

Market Outlook October 14, 2013

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