Now that I have your attention I would like to highlight the intriguing setup forming in the TSX-V as we enter the final month of 2016. The Venture Composite is in the fourth month of a decline which began in mid-August and the confluence of technical and seasonal factors offers a potentially compelling buy setup. 

TSX-V (Daily)

The confluence of the rising 200-day simple moving average and the 50% Fibonacci arc drawn from the January low to the August peak creates an attractive technical confluence. This combined with the fact that December is historically by far the strongest month of the year for the TSX-V places the odds firmly in favor of buying into any further dip late next week. 

Not only is December the strongest month of the year historically (rising 82% of the time from 1999-2015 for an average monthly gain of 4.3%), but January and February are also strong months making December-February by far the strongest time of the year to be long Venture stocks.

Much ado has been made about tax loss selling having the potential to weigh on precious metals mining shares through the end of the year. However, I believe the potential for tax loss selling to weigh much further on precious metals shares is limited. There are a few reasons for this:

  •  The precious metals sector is now in the 4th month of a sizable correction.
  •  Most brokers, portfolio managers, financial advisors, and investors are off their desks by mid-December.
  •  The vast majority of market participants have already completed year end tax planning. 

While the title of this post is dramatic, I believe it has a very good chance of coming to fruition as multiple factors align simultaneously. 

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