(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long AAV, PONY, AMC, ACU, AZM, CAD, CANX, CD, CS, MIN, NLC, and ORS.)
Three weeks into January and there’s no lack of things to look at in the market. Gold, oil, and copper are all hanging in just fine, but I’m keeping my eye on the DXY as usual. A lot of stocks have had great moves, and some not-so-great, but I definitely get a feel of optimism in the gold and resource sectors based on a broad cross-section of the market that I follow. Junior stories are moving, stocks are responding to drill results, and the market seems to be starting to think about upside more than downside; likely driven in part by calls from the mountain tops of market gurus and investment banks for increased exposure to the energy and materials sectors. I can’t vouch for the validity of macro calls like that, but I can watch the key charts and get a sense of what’s working and what’s not through continuous observation and reading. The TSX Venture index itself has come out of a multi-year low and is up about 12% from its November basement-like lows. Some junior copper stocks are getting attention (I’d feel a lot better if copper could get through $3), the shine has come off gas a little recently (but the value argument still holds water), oils are acting reasonably for a change, and it’s hit or miss with golds. Generally speaking, it feels like there’s money to be made out there as long as stories are delivering. Miss a step, or two, and the market has no qualms about leaving what was once hot on the side of the road in a heap and moving to the next name, as there’s no lack of opportunity out there. To that end, here are a few words on a few names that have had both good and bad starts to 2020.