Venture Exchange – Understand The Big Picture NOW To Make Huge Profits In The Months Ahead

Get ready for a MASSIVE move to the upside in the Venture Exchange over the next several months as a “risk-on” environment has emerged with no end date to the Federal Reserve’s just-announced QE3 program…add to this the ECB’s fire hose of cheap money and the likelihood of more stimulus measures from China following that country’s leadership transition in mid-October, and what we have is a Perfect Storm for junior resource investors…by late July/early August, it was clear to us – based on technical considerations – that the Venture Exchange low of 1154 in late June was in all likelihood the bottom of a 53% bear market slide that started in early March, 2011, shortly before the end of QE2…policy and political events this month (ECB, the Fed, and the growing probability of an Obama victory in November due to QE3 and an incompetent Republican campaign) have radically altered the monetary and fiscal landscapes, setting up a situation that is extremely bullish for hard assets and a speculative market like the Venture Exchange…

The Move has already started but is still in its infancy…since August 1, the Venture is up 11.4% vs. a gain of 4.5% for the Dow and 7.1% for the TSX…between now and the end of February, at the very least, we expect the Venture to be the best-performing exchange in North America and one of the best in the world…that was the case during QE1 and QE2, and there’s no reason to believe things will be any different this time around…the Venture could easily challenge the 2000 level by early next year which is almost a 50% jump from current levels…in that kind of environment, we’ll see plenty of doubles, triples, quadruples, and 10-baggers among individual stocks…

Within six months of the launch of QE1, the Venture climbed 57%…within six months of Bernanke’s infamous Jackson Hole speech in late August, 2010, which clearly signaled QE2 was on the way, the Venture rallied 67%…this time, we have an open-ended QE program from the Fed as well as aggressive action from the ECB…with loose monetary policy in place on a global scale for an indefinite period, rising commodity prices and a weak U.S. Dollar, this is the best time since the summer of 2010 to be accumulating quality junior exploration stocks…be patient but bold when you have to be…there is an “overhang” of paper in the market and some important CDNX resistance areas that will require volume and a bit of time to deal with, but once this “train” gets moving it will be unstoppable until early next year at least…

Below is a chart from John that we initially posted Friday and is worth re-posting, just to drive home the message…this is a 4.5-year weekly chart of the CDNX which shows how the Index and Gold have both reacted during the Fed’s previous two QE programs…notice in this weekly chart how the Venture’s RSI(14) is ready to bust out above 50, just like it did right around the time of Jackson Hole in 2010…expect the Index to gradually move into overbought territory during the fourth quarter and remain there for a period of time…this will obviously take increased volume, and that’s exactly what we started to see at the end of last week…there’s a lot of money still sitting on the sidelines or in “safe” instruments yielding very low returns…it won’t take long for that money to start flowing into investments and assets that are going to generate much greater returns over the short to medium term…