May started off ugly, and I heard from a lot of friends that were dreading even deeper selloffs on the 'sell-in-May' mantra. However, it appears that the annual sellathon did not come to pass this year. We had a little blip from the handfull of nuts that look at their calendar and think that is all there is to successful investing, but otherwise the truth is that the sector has been soldout for a long time and there are few shakey specs left to be fleeced these days.

I was buying more KXL last month in the mid-$2 range, and I think I even grabbed a few below $2.30, just on the assumption that a bounce was overdue. I think that bounce is at hand. When everyone that is succeptable to be shaken loose has already left the market, who is left to drive the stock lower? Bargain hunters on the sidelines are waiting for a sign of a firm bottom for the sector. Shorts are overextended for many juniors and ripe for a short-covering rally. The same could be pointed out in the metals trading pits.

We could be in for the mother of all rallies, exactly when there are few bulls around calling for one. Most analysts are extremely bearish and that is a great sign too. Even that putz Mahendra is predicting the collapse of commodities these days. Bull moves do not happen when everyone is excited and fully invested. They happen out of the blue when people are looking elsewhere, and then gain momentum when the herd catches on late in a move.

I think KXL has found the bottom and staged a quick bounce already. I think the stock will lead the sector higher. It has the feel of 2005 again this year and though I am bruised and bloody in my PF filled with red, I am still willing to flip the bird at the analysts and clueless idiots that are driving the agenda on CNBC. As the sector is famous for, a rise from the dead is probably just around the corner. And given the severity of the bear market for the last 2 years, the recovery should blow the doors off.

cheers!

mike