No Resources Recovery (Yet) Despite Strong Gains

John Robertson

PortfolioDirect

The small resources share price index has added 71% since the beginning of 2016 and appears to have begun forming a cyclical bottom after five years of decline. Despite 89% of stocks within the index trading above their 52 week moving average on Friday, applying the word “recovery” to the sector is premature. A relatively modest bounce has followed some overshooting on the downside. Bear in mind also that the so-called small resources index comprises a narrow base of relatively large stocks from within the hundreds in the sector. Only 58% of the stocks within the entire resources sector are currently trading above their 52 week moving averages. After rising, stocks have found difficulty in holding their gains. Of the stocks trading above their 52 week moving average, only 22% remain within 10% of their peak price over the past 12 months and only half are within 25%. Even after relatively strong recent trading conditions, prices across the entire sector are lower than their 2011-2016 peak levels by an average of 82%.


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John Robertson
John Robertson
PortfolioDirect

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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