The Downsides and Upsides

Author Larry Berman

Posted: 08 May 2012 re-posted from etfcm

We see 2-5% downside for the energy sector over the next few weeks to months. We see 5-8% downside for the banks and insurance companies. We see 20-25% upside for the gold stocks, offset to some degree by weaker base and other metals. As always, the rest of the TSX does not matter much—let’s call that slightly lower. The math suggests the downside risk is still another 3% for the TSX, and we probably do not see 11,000 unless gold stocks keep falling, which is possible.

In terms of the upside, it will be tough for the TSX to see much upside until the view of the world changes and the systemic risks are pushed to the back burner. Anyone out there bold enough to make that call? Choppy range trade at best for the next few months and probably a good buying opportunity coming as well. We soon expect the BoC to change their view on tightening as they did last year with global systemic risks heating up.



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