Everywhere I went in October the favorite topics of conversation were Novo and Garibaldi (in that order). Questions such as "What do you think of Novo here?" "How high can Garibaldi climb?" "How many ounces do you think Novo has?" "Do you think Garibaldi is real?" were heard over and over again from Vancouver to New Orleans to Palm Beach.
At some point in mid-October another momentum darling, HIVE Blockchain (TSX-V:HIVE), entered the fray and caught a great deal of attention. HIVE shares would proceed to gain more than 200% over the course of 3 weeks from October 12th to November 3rd (after already being up ~500% since it began trading on September 18th):
HIVE.V (October 12 - November 3 2017)
And make no mistake there was plenty of envy to go around as these stocks made new highs on virtually a daily basis. However, one thing you can be sure of in markets is that the pendulum swings both ways; when it has swung powerfully to one side you can be sure it will swing back the other way, it's just a matter of time.
Another rule of markets is that the air comes out much faster on the way down than it went in on the way up. In the case of GGI and HIVE this rule has proven to be very true, while NVO hasn't had a great November by any means it has held up much better than Garibaldi and HIVE:
GGI.V (Daily - 5 Months)
HIVE.V (Daily - 3 Months)
NVO.V (Daily - 5 Months)
November has been the month of air being released quickly and violently from the highest flying Venture stocks. While Novo Resources is well off its highs, Novo bulls should take some respite from the fact that other high flyers have been sold mercilessly (you can throw other names such as GT Gold and Patriot One into that mix). After all a ~25% correction after a ~1,000% rally isn't exactly an unusual or unexpected event.
There is another market 'theory' (it's probably more than a theory and more like a fact at this point) which states that money rotates from the latest hot sector(s) to the next hot sector(s). The uranium sector and NexGen Energy (TSX:NXE) specifically were the hot places to be at the beginning of 2017, and after an eight month decline which saw share prices cut nearly in half money is beginning to flow back into NXE and uranium stocks again:
NXE.TO (Daily - 5 Months)
It's probably not a complete coincidence that NXE's rise (and the uranium sector as a whole) has occurred nearly simultaneously with GGI/HIVE/NVO's declines.
NXE bulls will feel good this Thanksgiving as the market pendulum has begun to swing back in their favor and appears to have more room to run. However, GGI/HIVE/NVO bulls (I only group them together because they were momentum favorites at exactly the same time) will be trying to figure out if the pendulum is done swinging the wrong way. In at least one of those names my guess is that it isn't....
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DISCLAIMER: The work included in this article is based on current events, technical charts, 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. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. This publication 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.SEDAR.com for important risk disclosures. It’s your money and your responsibility.