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TSX Venture Exchange and Gold

The Venture posted its 7th straight weekly gain (we haven’t been able to say that for quite some time) as it continues to climb toward the next Fib. resistance at 591.  The Index added another 14 points last week to close at 576 and is now up a whopping 24% since its January 20 record low of 466.  This is shaping up to be the best March for the Venture since 2009.

A compelling argument can be made that what we’ve seen since late January is the first wave in a new bull market.  It’s reasonable to expect a modest pullback in the not-too-distant future but we would expect to see very strong support in the 550’s, right around the highs of last August, September and October.  There has been a dramatic improvement in the technical health of this market as John’s latest charts have shown, supporting the thesis that a long-term bear cycle has finally come to an end (hallelujah).   It will be months yet before many investors accept and recognize this which is fine – the “early movers”, those who can discern what’s likely to unfold through the rest of this year, therefore have a major advantage – similar to the situation in early 2011 when only a minority of investors were fortunate enough to pick up on the fact that the Venture had suddenly swung into a bear phase.

The Venture has outperformed the broader equity markets over the last 6 months.  That’s notable because it represents a major trend shift, a critical indicator in assessing the likely direction of the junior resource sector over the course of at least the next year.  In early 2011, the Venture’s 2-year outperformance vs. the major indices came to an abrupt halt.  And we all know what happened not long after that as the commodity complex went into a prolonged downturn beginning late that year, taking just about every stock with it.  Another important shift has occurred, this time in the Venture’s favor, and it bodes well for the balance of 2016 and into 2017.

Financings are picking up which is another good sign.  In the Lithium space, which is likely to remain hot this year, two companies in our Top 50 Opportunities List announced major financings Friday – Lithium X Energy (LIX, TSX-V) for $7.6 million, and Nemaska Lithium (NMX, TSX-V) for $13 million.

In today’s Week In Review And A Look Ahead…

1.  Venture’s 6-month chart shows how momentum has increased with the important breakout above the 550’s…

2.  U.S. dollar remains constrained – good news for the Venture…

3.  Why Gold’s downside is limited…

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