The Most Bullish TSX Venture Indicator Yet

Thu, Apr 25, 2013

Best Stocks To Buy Right Now (tsx)

TSX Venture IndicatorOver the last couple of years we’ve been warning about the massive risks of investing in the TSX Venture Exchange after it had a great run from 2008 to 2011.

The risks were massive. Many companies were sitting at all-time high valuations. Most were blowing through cash thinking the easy-financing days would continue forever. And finally, when the markets did turn in March 2011, we were getting concerned about what would happen if gold and Commodities Prices took a dive.

Well, in the last few weeks we’ve seen exactly what would happened when commodities prices did fall. Shortly after reaping our annual advice to “Sell in March and go away” from TSX Venture stocks, a sharp fall set in.

Led by gold’s two-day 15% slide, the TSX Venture Index fell 10% and was hitting lows not seen since 2009.

It is ugly all around. And there aren’t many catalysts for a sharp turnaround either.

However, this week we got the best news in years for the junior resource stocks which trade on the TSX Venture.

Darrin Hopkins, an investment advisor and an advisor to a number of boards and the TSX Venture itself, warned: “Say goodbye to the public venture market.

He noted the abysmal state of the venture funding, high legal fees for venture companies, and a number of other factors that would relegate the TSX Venture to “insignificance.”

Although this is hardly a 100% sure thing indicator of a turnaround. It is a sign of how low the expectations for the TSX Venture Market have fallen.

Only time will tell if this is like the “Death of Equities” in 1979, like the many who claimed “buy and hold is dead” in 2008, or the many investment analysts who have been calling for a crash ever since the current rally began in 2009.

But there is one thing we do know for sure. That’s great expectations lead to great disappointments. And low expectations lead to great and profitable surprises.

If we’re not to the point of ultimately low expectations, we’re closer than we were a few weeks ago.

For now, continue to wait for the downtrend to end. And if a new uptrend begins, jump on it. Because the TSX Venture Exchange and the tiny resource stocks which populate it are the best place to make a lot of money in a short period of time if the markets are rising.

Visit Contrarian Insights For More Information On TSX Venture Stocks

Good investing,

Andrew Mickey
Executive Editor, Contrarian Insights

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