Issue link: http://resourceworld.uberflip.com/i/554714
a u g u s t / s e p t e m b e r 2 0 1 5 www.resourceworld.com 23 at t h e m a r k e t R o d n e y B l a k e Capitulation? T hey did it. They finally did it. From uncertainty over Greece and a sudden 30% cor- rection in China's Shanghai Composite Index, they finally put enough negativism out there during the week of July 6th–10th to drive the TSX Venture Exchange back down to a record low of – now get this – 580 on August 6. For a while this year, as I wrote in my previous column, I was optimistic that we might get through this summer without a market meltdown, and up until the end of June the Venture Exchange held up pretty well. But then, the weight of the above mentioned events was just too much for the thinly traded junior exchange to absorb, and down it came to test the record low for the second time in the last seven months. Now the low last December, (and most every December), is understandable because of tax loss selling and investors needing funds for the holiday season and such. But what is it about the summer that brings out these extreme sell-offs in recent years? What is it about summer that makes the old adage of "Sell in May and go away" so insightful? After all, I'm sure some of you old-timers like me can remember when sum- mer was an optimistic time for resource stocks, as the explorers were out in the field and assay results were pending. Now, there seems to be one or more climactic event every summer that captures the media's attention and creates a wave of selling that negates any optimism the market may have had. This year it was Greece and China. Last year it was the Ebola crisis and the US Federal Reserve announcing pending interest rate hikes. Regardless of the event, I think it is the combination of sensationalized media and programmed computer trading that is killing the summer markets. The media has treated the economic problems of Greece like a climactic event. In addition, many large trading groups use programmed trading systems that sense changes in market sentiment and buy or sell ahead of those changes. The market troubles arise when more and more of these programs trade on one side of the market, and their speed and volume push the market in one direction to a greater extent than normal. Funny, a year ago no one was safe from Ebola, while today, we seldom hear the word mentioned. And although higher interest rates surely lie ahead, I wonder if the economic problems of Greece will still be headline news a year from now. The upshot of all of this is that the low of 582 has been tested and technically, if this holds, then a case can be said that the base has been built for the next up-leg to come. Sooner or later, and I'm thinking sooner, something will trigger the next major resource bull market. The headline-oriented media will announce the trend and the programmed computers that have been selling will begin to buy. Hopefully they'll buy just as aggres- sively as they've sold. n Rodney Blake is an Investment Advisors with Canaccord Genuity Wealth Management, a divi- sion 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 com- pleteness 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