I read a headline this morning that attributes “nervousness” to the market. The market is actually the sum of all human actions related to it, so I guess the anthropomorphism may be allowable. However, if we look closer at the behaviour of the market over the last week, I wouldn’t call it “nervous.”

The TSX rose 1.72% over the past week, which is pretty strong. At the same time, bond yields and interest rates fell, meaning that bond prices rose. It was a pretty good week for investors, because everything went up. Stocks outperformed bonds, however, and retain the advantage. A balanced portfolio should continue to overweight stocks.

Looking at the various markets, Brazilian stocks (EWZ) come out ahead in a comparison of momentum. They are followed closely by Canadian small caps (XCS) and Canadian large caps (XIU), luckily for us.

There are a couple stocks that grab my attention today. ERF has the best momentum among the TSX 60 and among the best in the market. Not only is the stock price rising, but it is paying a generous dividend. I own a small amount of this stock, but I currently wish I owned more.

Apple (AAPL) has recently jumped in the ranking, due to the spike in share price last week. I can’t tell whether or not it will continue to rise. Sometimes, you just have to own it early and patiently wait for that sort of payoff. Jumping in now could be dangerous.

Market Outlook May 5, 2014

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