Last week I met with a local professional trader who specialized in trading
only Canadian stocks. While he mainly trades the 75 large cap stocks on the
TSX which have the liquidity requirements he needs, he also trade penny stocks
on occasion.
When he pulled up the TSX Venture index and reviewed our outlooks, we both
came to a similar conclusion on what to expect moving forward.
We all know what happens to boats when the tide goes down... This index shows
very clearly why most penny stocks have been losing value the last three years.
Money has and continues to flow out of these equities and if fighting this
major trend it will likely cause you frustration and financial pain.
See my gold forecast and charts from a year ago: Click
Here
Overall gold and silver mining stocks are now entering a key long term investment
level, but don't jump the gun and buy yet...
Knowing that most of the largest moves based on percent happen during the
last 10% of the trend, we must expect micro-cap stock prices will be extremely
volatile for many months. Another 30-60% hair cut could still be ahead.
Canadian Equities Market:
The TSX Composite is heavily resource-weighted and this market has lagged
its counterparts around the world in the last year. This year the Canadian
index played catch-up as seen in the chart below and was the strongest index
in 2014 until this recent correction.
These equities may hold up well when the US market starts to top/correct.
This is because the TSX's is heavily weighted in late-cycle stocks (resources),
it's not unusual for the Canadian market to lag in the early stages of a bull
market in the USA, catch up in the late stages, and then outperform toward
the end.
Trading & Investing Conclusion:
In short, I think 2015 will be the start of a new micro-cap stock bull market.
Sure it could take more than a year to base and start to rally, but the time
will come when ridiculous amounts of money will be made in this corner of the
market.
We all hear stories about how a couple thousand dollars in a particular stock
would now be worth $250,000, $1,000,000 etc... well times like that will happen
again. But we must wait and watch for this perfect storm to unfold.
Starting in Dec/Jan I will start sharing my top 12 micro gold and silver stocks
along with my trades/positions in them as I take them.
Be sure to join my gold newsletter at: www.TheGoldAndOilGuy.com
