Any
group of stocks that have been out of favour for several months will as a
group, eventually serve up a recovery opportunity. One example would be tax
loss selling in December last year and the subsequent January recovery
opportunities as set out in a Getting Technical Interim Update #GT1389 dated December
14, 2012. The 55 stocks selected as a group returned over 15% by mid January
2013.
The
recent bearish stampede out of the precious metal miners has driven the prices
of many miners down to levels that may be extreme as measured by per cent
deviation from the mean – in this case a simple 30-week moving average. The
last group of stocks that were driven to historical negative per cent deviation
levels were the Canadian bank stocks at the peak of the global financial
crisis. In the example of Bank of Nova Scotia (BNS - $56.22) on February 20,
2009 the stock hit a low of $24.45 and printed negative per cent deviation # of
-35 %,.( a modern record).
The
table displayed here is the output for a filter run at June month end that
screened a basket of precious metals producers as to their current per cent
negative distance from their respective 30-week simple moving averages. The
selected basket was sorted by the % deviation number and then divided into four
probable outcomes.
Low
Risk Recovery Selections: Lowest risk with moderate short term positive returns
Medium
Risk Recovery Selections: Low risk with fair short term positive returns.
High
Risk Recovery Selections: High risk with above market positive returns
Question
of Survival Recovery Selections: Very high risk with volatile returns.
1 comment:
This is a great list.
Shawn
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