TSX Venture Market Outlook

June 21, 2010
The TSX Venture outlook for summer of 2010 may be disappointing to some, while providing opportunities to others. One person's loss is another's gain as the stock market is a zero sum game. This summer may prove to be soft for the markets.

There are still clouds of economic doubt hanging over the markets which could jeopordize the fragile recovery experienced in the West. The problems of Europe's debt still haven't been resolved. The recovery in Europe could be jeopordized if debt concerns escalte. In fact, the European debt crisis could spill over into North America as many banks have exposure to European assets.

China's economic growth has been slowing and the central bank of China is worried about inflation. In response to foreign pressure pertaining to trade imbalances and unfair trade practices the Chinese government today allowed the Yuan to somewhat free trade. This means that the Yuan is likely to keep rising. This in turn will help natural resource prices move up for things such as oil and copper. This will be important for the world going forward. Imagine if the Yuan is allowed to rise, there'll be much more demand from China for imports from US/Canada/etc. This might help Western economies. It'll also help to contain China's fear of inflation as their exports will slow down and imports will rise.

The second quarter earnings of Canadian and US companies will start to roll out in July. These earnings may not live up to expectations. This could add further pressure for drops or correction in the TSX Venture, Dow, Nasdaq, TSX and S&P. It will be interesting to see how well the markets fair in summer of 2010.

If market conditions tend to remain stable or degrade then it'll be likely TSX Venture companies will find it very difficult to obtain financing. Many of the penny stocks which trade between 5 to 10 cents might not be able to raise capital without first consolidating. Always check the number of shares issued and outstanding for TSX Venture stocks. Those with a high number of shares outstanding, say greater than 100 million, will have a higher chance of consolidating than those with tight floats. This presents an opportunity for those with cash to pick-up some of their favourite stocks at lower prices post-consolidation. This could also be a danger to those currently holding shares of companies which will be in need of capital.

Bookmark Findnewspapers.com for the latest news blog stories

Daily news stories from local, world and blog newspapers