TSX-Venture Closes At 52-Week High, Confirms Breakout
One day after being rattled by Tariff Man, Canadian small/micro caps surged more than 2.5% and closed at their highest level since April 2023
The TSX-Venture Composite is far from a perfect index for tracking junior resource companies. However, it’s one of the better tools that we have that’s easily available for everyone to reference.
Heading into last week, the TSX-V had tested the 625-627 resistance area four times since October. A relatively shallow pullback in January had helped to build additional tension - the fifth test of this resistance area was sure to be the charm, right?
Friday afternoon, the TSX-V moved above 630 and the breakout appeared to be underway. But as soon as it got underway, Tariff Man hit the newswires and the prospect of 25% tariffs on Canada quickly quelled investor enthusiasm.
TSX-Venture Composite (Daily)
The tariff war shakeout lasted all of 72 hours before buyers stepped back in and took control, driving the TSX-V to its highest close since April 2023; today’s rally represents a decisive breakout that has occurred against the backdrop of relatively bleak investor sentiment on both the country of Canada, and the natural resources sector more broadly.
Now let’s not get too carried away and start talking about pouring whiskey bottles into shot glasses or anything like that. But I must say, it feels good.
It feels damn good.
The best part is that today’s “breakout” is barely a blip in the context of the bigger picture:
TSX-Venture Composite (Weekly)
A confirmed breakout on a weekly closing basis would first target an open gap from June 2022 up at ~704, followed by another open gap from May 2022 at ~770. Suffice to say, a small sprinkle of greed injected into deeply downtrodden Canadian junior resource equities could generate a ~20% gain in the TSX-V within a few months.
If anything in this post began to make you feel greedy even in the slightest bit, please remember that there will be an abundance of opportunities in what could prove to be a generational wealth creation cycle in natural resources. Develop a plan that fits your risk tolerance and investment time frame, then follow the plan with a strict risk management discipline.
No FOMO. No hot tips. No cost averaging repeatedly into losers.
"An idiot with a plan can beat a genius without a plan." ~ Warren Buffett
“One of the most helpful things that anybody can learn is to give up trying to catch the last eighth—or the first. These two are the most expensive eighths in the world.” - Edwin Lefèvre, Reminiscences of a Stock Operator
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, corporate presentations and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This article is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDARplus.ca for important risk disclosures. It’s your money and your responsibility.