Is the Metal Commodities Bear Market Over or Is There Grief Still to Come?

Source:

...the markets bottomed last week and while we may not yet be in a real bull run, we could be out of the true bear phase. Better quality stocks have been oversold, and this applies to metals and minerals stocks as much as anything else, so there are some big bargains to be found out there.

I am indebted to Rod Blake of Canaccord in Vancouver for highlighting the following quote from Canaccord Capital's Chief Portfolio Strategist Nick Majendie.

"If we are close to a bottom, we believe it will be the quality blue chip stocks that will recover the fastest. Why? The answer is because when there is financial panic, investors sell the good with the bad. With all the recent de-leveraging by financial institutions and in particular hedge funds, the margin clerk has been king. Whatever could catch a bid was often sold so that even blue chip stocks have traded down to Depression-type valuations. Quality stocks with strong balance sheets, good and sustainable dividends and good long-term prospects should then be the first to recover."..

Rod Blake also highlights in a weekly ‘blog' a most interesting observation from the Gartman Letter in that "Bear markets panics end in late October. Do not ask us why this is so; we note only that it is so. We note that panic, after panic, after panic has begun in September and has ended in October. More importantly than that, the last week of October has been the ending point for those panics. More importantly still, October 27th is the average ending date for so many of them in the past." This note was written on October 27th - and there has certainly been a major pick-up in world stock markets over the last few days of last month. Let's hope this observation proves true yet again...

So what is the essence of the above. If the commentators quoted are correct, the markets bottomed last week and while we may not yet be in a real bull run, we could be out of the true bear phase. Better quality stocks have been oversold, and this applies to metals and minerals stocks as much as anything else, so there are some big bargains to be found out there.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe