A high Canadian Dollar = Cheap U.S. Stocks

When it comes to investing the average Canadian will typically be up to their necks in small-cap resource stocks. A glance at any TSX most-active list tells the story. Day after day, resource stocks dominate the most-actives. Last Tuesday there were only six non-commodities related stocks in the top thirty most-actives list. Contrast that to the new 52-week high list. Out of a population of twenty five new 52-week highs, only two were commodity related.

The reality is while the commodity stocks are actively traded, most have been treading water since early January. This is typical of an over-crowded space where the owners of gold, copper and energy stocks trade among themselves much like sport fans trading baseball cards. The lack of new money entering an over-crowded space will make the group vulnerable to any noise that could trigger panic selling. The “noise” that triggered the bearish stampede out of the commodity space was the CME Group announcing margin requirement increases for gold and silver futures

OK so now we had a correction in the commodity space and I wonder how many Canadian investors will buy more of this stuff and ignore the opportunities in the US markets? Our Dow vs. TSX60 chart displays a surprising reality – the big cap DOW has been out performing our big cap TSX60 for about a year and lately that over perform is accelerating. The NASDAQ Comp is even stronger – wake up and take advantage of our over-priced petro-dollar.