- Mr Market is feeling happier
- Swoop in now
- Plus, NEW STOCK REPORT RELEASED TOMORROW!
Watch commodity prices. They’re starting to move…
Oil was up another 1.44% in the US overnight. Precious metal palladium made an all-time high. Gold in Aussie dollars is still around a record price.
I would keep a sharp eye on copper and zinc from here.
Inventories of these two are running down to very low levels.
They could really run if something triggers anxiety over supply.
We really could be in for some fun on the ASX this year, if they begin to rumble.
Commodity stocks make for great speculations…
Any regular business would love nothing more than an easy way to increase its margins. But it’s never that simple.
You have to provide a hugely compelling proposition to make customers pay more than the competition.
But if a commodity price rises strongly — and a miner can keep its costs fixed — its earnings can expand straightaway. The extra revenue goes straight to the bottom line.
Look no further than BHP Group [ASX:BHP], Rio Tinto [ASX:RIO] and Fortescue Metals Group [ASX:FMG] for this effect playing out right now.
Since 23 January, they are up 16%, 19% and 42% respectively.
This is thanks to the move up in iron ore.
Now, this particular rally might be just about done. But it shows the potential moves you can see in a short amount of time.
How to find 2019's biggest stock market winners
Small-cap stocks are the most exciting stocks on the ASX. But they’re also the riskiest. In this free guide our small-stock expert, Callum Newman, reveals seven things he believes every investor should know before risking any money. Plus, get a free subscription to Australia’s newest, most forward-looking daily investment email, Profit Watch. Enter your email address below and click ‘Send Me My FREE Report’.
There’s a ‘hidden’ effect of rising commodity prices, too. It gives miners more cashflow to invest in exploration and drilling.
That increases their chances of finding new deposits — usually major catalysts for significant share price rises.
For example, Fortescue, like Rio, is now hunting for copper in the Pilbara region of Western Australia as well.
This is the kind of investment that can show up in share value later, if they find something.
This current situation is also an example of why flat periods in the market, like 2018, can be helpful…
The setups for some great trades are in place now
It gives you time to study and investigate. It can be difficult to keep a cool head when share prices are taking off.
There’s a temptation to try and get in on the action all the time.
Patience is underrated. I spent a lot of 2018 building up a watchlist of companies, and going over their projects and potential catalysts.
Now we just need the cards to fall our way for these ideas to become profitable.
After all, in the case of the recent rally, you can’t just buy any old iron ore stock. You need to know the ones that can capture the uplift straightaway, and how much balance sheet risk they carry.
‘Luck follows the prepared mind’, or so they say.
Timing is always a tricky thing.
I happen to be reading a book about the developments and aftermath of 2008.
Some traders were shorting the markets — or at least staying away — around US housing as early as 2005.
As we know in hindsight, it took several years for the stresses to really start showing up.
Commodity expert Rick Rule has a good line on this: Just because something is inevitable does not mean it’s imminent.
Anyway, you’re lucky…
Tomorrow is the most important day of
the year so far for Profit Watch readers…
Tomorrow, I’m releasing a report on five awesome stocks to pick up cheap while market values are down on last year.
I can’t get the thing out quick enough.
Two of the stocks are pushing up towards their buy-up-to prices already.
Another one I considered has gone up 19% in two days.
This is why I sense the psychology of the market is beginning to turn. Volume and interest are coming back after disappearing for a lot of 2018.
I’m also beginning to understand some of the gripes of fund managers.
When share prices are languishing, nobody is interested in hearing it. When they start moving, everyone wants to jump on board — at higher prices.
The next three months are going to be super exciting for readers of Small Cap Alpha.
We have multiple stocks in play, drilling and exploring for various natural resources.
We could see some explosive moves. Of course, they may not work out. That’s always a risk.
But if you can buy up shares when they’re depressed — relative to the upside — it’s a cracking situation.
I should mention I have two ‘tech’ ideas in the new report too. I’m pumped about these two as well.
So many opportunities present themselves in the market — all the time.
Make sure to check your inbox tomorrow for the release of my new report: ‘The five most under-priced stocks in Australia’.
PS: WATCH PART THREE OF MY ‘SPECIAL SITUATION’ VIDEO SERIES TODAY!
I believe I’ve found the five most enticing small-cap prospects on the market right now. They are all outstanding companies. All looking to break out in their respective industries. And all equally smashed by the market correction last year.
That means they are now on sale for a 30-53% DISCOUNT from their 12-month highs…AND THE MARKET IS STARTING TO MOVE AGAIN…
In advance of the release of my brand-new stock research tomorrow, I’ve recorded a short, three-part video series to bring you up to speed…and to prime you for what’s to come. I’ll send you a note later today when the third video is live.
If you missed the first two videos, go HERE.