Resource World Magazine

AT T H E M A R KE T Rodne y B l a k e Bullish Technical Indicators N ear the end of June I sent an alert out to my clients stating that I thought gold bullion had just experienced an important Key Reversal day in that, following a perilous two-week waterfall like plunge from the US $1,375/oz level, gold bullion had opened on June 28th at $1,199, which was significantly below its previous day's close of $1,212 and then rallied during the day to close considerably higher than the previous day's close at $1,224. This was important to me because it was an indicator that the sellers of gold bullion, led by the large gold backed exchange traded funds or ETFs, had finally exhausted themselves of their selling, leaving the way for buyers of the yellow metal to once again take control of the bullion market. One day does not a market make, but to me this was the most significant indicator yet that the gut wrenching, two-year, bear market in gold bullion that began in September 2011, was finally over. Interestingly, and no surprise, the bottoming in gold bullion was duplicated by many resource stocks, as indicated by the TSX Venture Exchange that bottomed that same day in June at 859. But while gold reversed in one day to close higher, the TSX Venture Exchange took a little while longer and quietly recovered to the 930 level over the next three weeks and since then has been consolidating at or about this level. This recovery to the 930 level was of note because 930 was the support level the Venture Exchange had managed to hold for some two-months before it broke down with gold at the end of June, and was therefore, the resistance level that the exchange had to break through before being able to move higher. By consolidating at 930, breaking down to 859, then recovering and consolidating again at 930, the TSX Venture Exchange had traced out another bullish indicator of a market reversal - an Inverse Head & Shoulders. Simply, an Inverse Head & Shoulders chart pattern is when a stock, or in this case an index, consolidates, breaks down sharply and then rises to the previous level and consolidates again. The two consolidation levels form the right and left shoulders and the breakdown in the middle forms the inverted neck and head. The theory is that once the inversed head and shoulders have formed, the index has sold off and then rebuilt a base from which to move higher. This is the pattern that I think the TSX Venture Exchange seems to building this summer. In the past two-months I feel I've identified a Key Reversal in gold bullion and an Inverse Head & Shoulders pattern for the TSX Venture Exchange; two very bullish technical indicators that perhaps the worst is over for the resource markets. If I'm right, I'll be looking for these important technical indicators to reverse or re-invert themselves when the resource markets turn bearish once again…in about four or five years. n Rodney Blake is an Investment Advisors with Canaccord Genuity Wealth Management, a division of Canaccord Genuity Corp, Member-Canadian Investor Protection Fund. The information contained in this article is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it does Rodney Blake, Canaccord Genuity Corp, or its subsidiaries, or affiliated companies, assume any liability. This information is current as of the date appearing in this article, we do not assume any obligation to update the information or advise on further developments relating to these securities. This article should not be considered personal investment advice or a solicitation to buy or sell securities. Canaccord Genuity and holdings of its respective directors, officers and employees and their associations, from time to time may buy or sell any securities mentioned herein. The views expressed are those of the author and not necessarily those of Canaccord Genuity Corp. Rodney Blake can be reached at 604-643-7567 or rod.blake@canaccord.com SEPTEMBER 2013 www.resourceworld.com 25

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