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____ Friday February 19, 2016 ____

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Chart of the Week

This only happens near bottoms

Source: S&P Dow Jones Indices.

This is the biggest 3-day gain in about 6 months for the index, and gains of this magnitude have only happened near oil bottoms.

This does not necessarily mean the bottom is in but it is another sign that if it is not, we are quite close. At bottoms you get very sharp, steep rallies as the boat gets tipped all the way to one side as the short sellers pile on. Then suddenly, on some bit of news out of OPEC or some other key player, everyone runs for the exit and has to buy back in to cover their short quickly spiking the price.

I am not in the camp that oil is going back to $100 anytime soon but some simple math will tell you that it can't stay down here at $30 for much longer. At $30 oil almost every North American producer will be bankrupt within 2 to 3 years. Production is being cut as we speak and supply will go down and prices will rise. Always has, always will.

Bottom line, much like gold, the train is about to leave the station and you want to make sure you have a seat because the ride back up is going to be quite profitable for those who can stay the course.

Mike Hayhoe, BSc, CIM, Branch Manager & Senior Investment Advisor at independent Wealth Management Canaccord Genuity Wealth Management

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