We are pleased to celebrate the re-launch of Canadian Insider by sharing some thoughts on the market.
We begin with a particularly noteworthy chart. The iShares Russell Microcap Index Fund (IWC*US) is a chart I have been following closely. It may surprise people that this fund which holds small cap companies in diverse sectors, has been outperforming the US and Canadian market for about a year and has in the past few sessions, broken out to a multi-year high - importantly, with very little attention from the financial media. Small companies are economically sensitive and as a result, continued strength in this chart provides a bullish backdrop for stocks overall. Indeed, speculation and an appetite for risk appear to be returning.
A second chart worth watching is iPath Bloomberg Commodity (DJP*US). It has exposure to numerous commodities and its chart looks to have bottomed back in March. Shares have bullishly made higher lows since then. Volume does need to increase for a breakout move to be sustainable, but momentum looks favourable for a further move forward in the near-term. We think two consecutive closes above $29 over the next few days, would prove very bullish for the commodity sector.
The bullish indications of these microcap and commodity charts dovetail with our proprietary signals which also suggest we are going to see the US broad market continue higher as well as small and microcap companies in the US and Canada. This quarter, a parabolic move in the US dollar pressured not only commodities but also seemed to cap the broad US market. An unwinding of the US dollar's massive rise would re-ignite under-performing assets like these.
With that in mind, here are a few ideas we're looking at:
Midway Gold (MDW) is an intriguing idea based on the fact it is a new gold producer in Nevada, and has produced 2,300 ounces of gold so far. Its shares took a 50% haircut in early March when production was briefly delayed and the company announced they would have to come up with a $5 million shortfall. However, on Monday they announced a non-dilutive transaction furnishing them with $10.5 million, more than covering the needed funds. Short interest in Midway encouragingly fell 10% in March and should we see gold prices turn up, we think Midway shares will have a lot of upside torque. In addition, insiders have bought $2 million in shares in the past year, including Midway’s CEO who bought $100,000 worth- without making any sales.
We expect market volatility in the weeks ahead to provide some profitable trading opportunities for investors. We invite you to follow us on Twitter at http://www.twitter.com/HedgehogTrader where we provide commentary and even share specific stock and market predictions.
Nicholas Winton uses proprietary signals to forecast likely moves in stocks and commodities and is the editor of Hedgehog Trader http://www.GOHHT.COM where he runs Hedgehog Trader Newsletter (HHT) his flag-ship advisory that provides excellent trading ideas, with a big picture view of the markets and commodities; and Hedgehog High Roller (HHHR) which covers exciting microcaps and nanocaps; Nicholas also consults for fund managers and private clients.
Disclosure: of the companies mentioned, Nicholas owns MDW shares. This blog post originally appeared on INKResearch.com April 21.