New York and Toronto stock markets will both surpass 20,000
The Dow Jones industrial average closed at 11,555.63 today, and here in Canada, the S&P/TSX composite index closed at 11,732.50. As the only way out of the current morass involves printing enough money to get inflation re-started, one may feel that resource-rich Canada will move ahead and power its way to 20,000 before the Dow. It's possible, however it may be more likely that the resource panic peaks in 2011 / 2012 and technology / green energy takes over as the primary economic engine from 2013 onwards. In this scenario, I see the Dow hitting 20,000 in August 2018 and/or in the 3rd week of January 2019, Twin Peaks, before retreating below 16,000 by late September 2019.
The TSX will peak in July 2018 at 19,280 before a Summer / Autumn swoon, rally again to 18,900 by late January 2019, and then correct to below 16,700 by November 2019. The Toronto Market will have to wait for the glory of sailing through 20k until the Spring of 2021. At that point, Jah willing, we'll post a Race to 30,000 article.
Presidential cycle favours buying near end of 3rd year uncertainty
With regards to North American cycles, if you are playing the stock market (eg you are underweight equity funds and would like to move the weighting up a bit), the historical best time to buy equities is late November / early December in the 3rd year of the USA Presidency (eg now), a season where plunging markets can often be exacerbated by personal and institutional tax-loss sellers. The market almost always falls in the 3rd year because it is long over for the honeymoon phase and too early to pump the money supply and economy for the next election, as that starts early in the 4th year. So if you are into buying equities, the next few weeks of tax-loss selling should provide great opportunities for long term investors to do some tax-loss BUYING.
Remember:
"Markets climb a wall of worry."
Joseph Trainor, CIM
November 29, 2011
