When I last wrote, gold (IGT) had the greatest momentum. After that, Chinese stocks briefly took the lead, but gold has been in favour over the past four weeks. This is likely due to a price jump about three weeks ago (when the Bank of Canada dropped interest rates?), so it makes sense to see what other asset classes are showing positive momentum. These include emerging markets (XEM) and European stocks (FXI), although the latter is hedged to C$, which are weakening, and that may be the source of the positive performance.

Even though interest rates were already low, the central bank has reduced prime. That’s good for bond owners, but not prospective buyers. In the longer term, lower rates should spur economic activity, which would produce stock market growth. Time will tell.

Some stocks to look at this week (none of which I own) might include: Valeant (VRX), Metro (MRU), AgnicoEagle (AEM) which may regress as gold prices return to the mean, Amazon (AMZN), Lowes (LOW), and, for gamblers, a penny stock: LTS.

Market Outlook February 9, 2015

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