Canadian Venture Index - Gold and Penny Stocks

By: Chris Vermeulen | Tue, Nov 11, 2014
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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.

CDNX Weekly Chart


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.

TSX Weekly Chart


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.

 


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Chris Vermeulen

Author: Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
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Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Chris' mission is to help his clients boost their investment performance while reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. Chris is responsible for market research and trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors around the world. He designed an automated algorithmic trading system for the S&P 500 index which solves his client's biggest problem related to investing in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades' automated trading systems allows individuals to investing using either exchange traded funds or the ES mini futures contracts. It is supported by many leading brokerage firms including:

- Interactive Brokers
- Trade MONSTER
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He is the author of the popular book "Technical Trading Mastery - 7 Steps To Win With Logic." He has also been featured on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites. His list of personal and professional relationships approaches 25,000, people with whom he connects and shares is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight pilots license. He resides in the Toronto area with his wife Kristen and two children.

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