As Uncle Buck continues to play the ‘will he or won’t he?’ (break down after the bear flag or break upward) game, an important inter-market ratio is saying that commodity/resources related speculation is alive and well.
The TSX-V/TSX ratio broke out of the base, pulled back for a test and is slightly ticking a new high. Not bad at all, as it currently stands. Let’s keep this as a positive indicator for the short-term but also in the back of our minds recall what NFTRH 811 had to say on the bigger picture:
Another important test will come in the form of its [TSX-V’s] ratio to Canada’s senior index. A hold and new upturn could be a very positive bigger picture signal for commodity/resources and precious metals bulls if the more speculative areas start to outperform.
After having spent the last 18 years in the wilderness, a real bull move in the ratio would sure be something. The small resource stock play began to expire in 2006, was blown up in 2008 and has trended down ever since during an age when global central banking has been in complete control, managing the appearance of inflation problems right out of the picture. Again, see the 30yr Treasury Yield Continuum above… and ponder.
It is not my intention to stimulate your greed impulse, but imagine if this ratio ever does start to bull again. Imagine the potential profits that could come by catching the lows. Okay Gary, back to reality…
It is early times and it is just a fledgling potential signal. But the longer it goes on the better potential for the commodity/resources areas in the short-term and potentially the longer-term as well. It’s been 18 years in the wilderness, after all.
