-- Published: Monday, 22 December 2014 | Print | Disqus
A Monday Morning Musing from Mickey the Mercenary Geologist
December 22, 2014
We are in the dog days of December. This is a phenomenon that occurs per annum in the junior resource markets. To wit: there is a significant decline in stock valuations during the middle of the final month of the year. These annual downticks are driven mainly by tax-loss selling, but a contributing factor is an otherwise disinterested investor base as folks ready for the gifting and party season.
In the series of Toronto Venture Exchange Index charts that follow, I document these mid-December declines since a rising gold price resurrected the junior resource market in 2003. Note that each chart covers a period from November 20 to January 10, equaling 33 to 35 trading days:
The conclusion from these charts is that a short-term low for the Toronto Venture Exchange almost always occurs in mid-December. This is particularly so in bear market years, when tax-loss selling is at its strongest and investor interest is at its lowest. Only one of the past 11 years has bucked this trend and that happened during the raging bull market of 2005-2006.
Finally, here’s the chart from November 20 to Thursday December 18, 2014:
Though the current chart is incomplete, I will make some short-term predictions based on previous bear market years:
· The Toronto Venture Exchange Index low for 2014 was likely hit on Tuesday, December 16.
· The market will probably recover a bit or flat line thru the end of this year.
· There should be a significant rally in junior resource stocks in the early days of 2015.
While hitting the late afternoon holiday party scene in Vancouver’s financial district this week, I have noticed markedly smaller crowds filled with many long faces and listened to too many woeful tales regarding the state of the junior stock market.
Personally however, I dig the dog days of December. We are now in the middle of a very short window of five to ten trading days that presents the year’s best opportunity to bottom fish for undervalued companies.
If chosen carefully using strong due diligence and thorough research, these will be the stocks that lead a typical rally into the New Year. If past is prologue, I can confidently forecast that the fortunes in a fortnight will appear rosier for a number of the best junior resource companies.
Whether the predicted rally in early 2015 will have any sort of staying power in the current bear market is equivocal. That may simply be a function of future commodities prices and in particular, for gold, oil, and copper.
Ciao for now,
Acknowledgment: Gwen Preston is the editor of MercenaryGeologist.com.
The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia.
Mickey worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specializing in geological mapping, property evaluation, and business development. In addition to Mickey’s professional credentials and experience, he is high-altitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia.
Mickey is well-known and highly respected throughout the mining and exploration community due to his ongoing work as an analyst, writer, and speaker.
Disclaimer and Notice: I am not a certified financial analyst, broker, or professional qualified to offer investment advice. Nothing in any report, commentary, this website, interview, and other content constitutes or can be construed as investment advice or an offer or solicitation or advice to buy or sell stock or any asset or investment. All of my presentations should be considered an opinion and my opinions may be based upon information obtained from research of public documents and content available on the company’s website, regulatory filings, various stock exchange websites, and stock information services, through discussions with company representatives, agents, other professionals and investors, and field visits. My opinions are based upon information believed to be accurate and reliable, but my opinions are not guaranteed or implied to be so. The opinions presented may not be complete or correct; all information is provided without any legal responsibility or obligation to provide future updates. I accept no responsibility and no liability, whatsoever, for any direct, indirect, special, punitive, or consequential damages or loss arising from the use of my opinions or information. The information contained in a report, commentary, this website, interview, and other content is subject to change without notice, may become outdated, and may not be updated. A report, commentary, this website, interview, and other content reflect my personal opinions and views and nothing more. All content of this website is subject to international copyright protection and no part or portion of this website, report, commentary, interview, and other content may be altered, reproduced, copied, emailed, faxed, or distributed in any form without the express written consent of Michael S. (Mickey) Fulp, MercenaryGeologist.com LLC.
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-- Published: Monday, 22 December 2014 | E-Mail | Print | Source: GoldSeek.com