Canadian Juniors Exploding in Gold Stock Rally
Source: Wall Street Window (10/29/07)
For the next 3-6 months I expect gold stocks to trade in a similar manner to what we have seen since September 17: rally hard, pause, pull back less than people expect, and then rally again. That means there will be huge profits to made in gold stocks.
After Monday's bounce, I added another gold stock to the WSW Power Picks list. The gold stocks are trading much differently than they have in other bulls runs we have seen in the past five years. In the past, the XAU would correct roughly 10% several times during a bull run. This time the drop off of was less than 8%. Gold stocks appear to be trading in a similar fashion as the DOW from August of 2006 to February of 2007 or oil stocks from March of 2006.
During this time frame, both the DOW and oil stocks traded in a bullish uptrend for months at a time without hardly any pullback at all. This made it very difficult for people who were looking for a pullback to buy to get in. The charts seemed to defy traditional technical analysis. That made trading in and out very difficult. The best way to make money was to simply buy a core position and hold it.
For the next 3-6 months I expect gold stocks to trade in a similar manner to what we have seen since September 17: rally hard, pause, pull back less than people expect, and then rally again. That means there will be huge profits to made in gold stocks. Anyone interested in the gold market is familiar with the names of the big cap gold stocks, and I expect to see nice profits from them over the next few months, but when gold stocks go into an uptrend the biggest gains are to made in the smaller junior mining companies, most of which trade in Canada on the Vancouver or Toronto stock exchange. For instance, I placed one Canadian exploration stock on the WSW Power Picks list on October 10th. As of Friday's close it was already up 17% and I think that's just the beginning of the gains to come from it.
Commodity stocks are the hottest things in the market. You need to think of big cap stocks such a Newmont, Agnico-Eagle, and the rest of the components of the XAU and HUI as the equivalent of Cisco and Oracle during the tech stock bull market of the late 1990's and the Canadian juniors as what Internet stocks were back then - places where you can get make huge returns fast.
Most US brokers give their customers access to the Canadian markets. The problem most US investors face, though, is getting information on Canadian stocks. Few charting programs include Canadian data feeds because it is only a small niche of American investors who even know the opportunities that exist in the Canadian junior market. There are almost 1,000 Canadian mining companies trading north of the border and they are under the radar of almost all Americans.
Over the past few years, I have relied on contacts inside the mining industry and industry journals such as the North American Miner to discover new opportunities in the Canadian market. This has stood in sharp contrast to the US market where most stocks I discover are by looking through 1000's of charts using the popular Worden Brothers TC2007 software. I use TC2007 to track and rank the sectors of the market. It breaks the market down into 239 industry groups which makes it easy to rank these groups, and with a click, I can go through the individual stocks in each group.
This weekend Worden Brothers added Canadian data to their new 'Blocks' software. I immediately put it to use. It took me several hours, but I looked through every single Canadian mining stock that does over 90,000 shares of volume a day. I then checked their fundamentals and picked out two stocks that I just bought on the open and added to the WSW Power Picks list. These stocks have great charts and all are emerging producers with low valuations and 300% earnings growth ahead of them.
If you are interested in the Blocks software go to the Worden Brothers website. Click software and pricing. Then go to 'Blocks Strategy Trade Pack'. You'll have to download it and then call their toll free number to tell them you want to activate Canadian Investor.
It is so new that they don't even have it listed on their website yet. But with gold heating up, now is the time to buy Canadian juniors. I couldn't wait another minute so I downloaded the data and went to work as soon as I found out about it. This is the best place to make money in the stock market right now.