Last week was not a good one for the stock market. Actually, there was only one bad day, but what a day Monday was. The TSX opened about 1.5% lower than the prior Friday close, then continued to drop, ending the day over 2% lower. That could have been the beginning of a serious market correction, but the rest of the week recovered a portion of the losses. It is more likely that this was an emotional over-reaction of the market to bad news.
Bonds and stocks both have negative momentum. Oil is the worst among the asset classes I track. Only gold (IGT) has moderately positive momentum presently. That’s not a good sign. Even the Canadian dollar has a weak outlook, with the British Pound looking the most promising. At least the yield curve is normal.
Among Canadian stocks, Valeant (VRX) still looks promising, along with Catamaran Corporation (CCT). With the possible exception of Agrium (AGU), others look far less appealing. In the American market, Williams Companies (WMB), Lilly (LLY), Amazon (AMZN) and Nike (NKE) appear attractive. It speaks to the weakness across the market.