ShareHub Hotlist 2018 Review – Week 4

Another strong week for the broader Indices. The DOW and S&P seem on auto pilot as the Bots and Algo’s just keep on buying up those bluechips no matter what the dizzy heights. Of course, at some point the Algo’s will be switched to ‘sell mode’ and with a bit of help from the normal media channels, I suspect there will be a few ‘market crash’ headlines coming. The truth is… market commentators have been calling the market overbought for the last 12 months. The last 12 weeks have been nothing short of absurd for the DOW and S&P. Just because there is no bad news around does not mean you buy up equities regardless of price valuations. With the DOW testing 26650 recently, there’s every chance it could drop 2500pts and still look absolutely fine. Of course, a drop of 2500pts would have huge panic and wild swings thrown in which is probably why the VIX index is picking up recently after being flat for months. It’s the aggressive moves that shake the market and volatility is precisely what the hedge funds want. But the question that remains unanswered at this present time is whether commodities such as PoO and PoG will follow any market correction down? The irony is, PoO is looking more bullish by the day at a time when the broader market is looking more bearish. What would 2500pts off the DOW do for PoO or PoG? Well, I guess we’ll find out soon as the DOW is long overdue a corrective move. Whether this is temporary or more permanent is anyone’s guess at the moment. But if ‘bad’ news remains a rarity – then it would seem any pullback would simply be bought back into once the dust has settled. Historically, Gold has been a go-to safety haven when volatility returns and with crypto’s looking wobbly, Gold might be the strongest play around. Investors concerned over market corrections should look carefully at market trading volumes particularly on small cap equities. Small caps often correct or move in volatile patterns but it’s often the ‘volume’ indicator that gives the game away or suggests ‘fake’ moves. Light volume moves have relevance but are often weak indictors and can reverse swiftly.

Week 4 Review – Another decent week for TheShareHub 2018 picks. The 2017 picks are slipping back a little, suggesting that the 2018 rotation is delivering some benefits from fresh legs. January is notoriously a month of ups and downs as the start to the year is often excitable. Feb and March will provide better indicators to read/follow. Stocks of note are Cora Gold and SOLG. Both released decent news yet got no real gain out of it. SOLG is approaching ‘oversold’ so certainly one to watch closely. The market is beginning to show signs of a return to previous levels of ignorance or benign interest when it comes to exploration results. I suspect a bit of M&A in the sector is needed again before some excitement returns to these stocks. After a period of 3 to 4 years in the doldrums, it’s about time the mid tier and Super Majors got the cheque books out. There are plenty of resource heavy companies out there that are cheaper than cheap. And plenty of resource rich ‘producing’ companies too. It only takes a deal or two before the market attention sweeps through the rest of the sector. Stocks like Ophir, Premier Oil, Tullow, SOLG, AMER, Petrofac, Enquest, Faroe Petroluem, Hummingbird Resources… the list goes on… are all good buys for any company that has cash doing little at present or are short on reserves/resources. Interesting times ahead in 2018, just need the first piece of M&A to kick off and the rest should follow.

As per last week, the sharehub 2017 picks have been included as a comparison tool. The picks started the year 9.75% down and are 6.5% up in 2018. In future, the 2017 picks will be added every month rather than every week with the other 2 newspaper picks continuing to fight it out with the ShareHub 2018 picks and reported on a weekly basis.

Plenty of news catalysts worthy of discussion to follow across the top ten picks in the coming weeks as 2018 gets into its stride.