November was a quite a gut-check. After a strong October, US markets dropped right back into the lower trading range. However, because the last 3 days of the month were so strong, November finished down only about 1%. US markets are now back into the upper trading range, in fact, it wouldn't take much to close positive for the year. Hard to believe, given the incredible storm of volatility, bad news and fear mongering of late. The pattern from the Oct. low actually looks like an intermediate term bottoming formation. Sometimes hard to do, but I find it's usually better to tune out the news & fear flow and just go with the chart patterns.

There is one big fat fly in the ointment - the underperformance of the juniors. I would be more comfortable if they were leading instead of lagging. But this has been the theme all year – Venture is down 32% year to date, while the US total index is only down 3%. Clearly, a yearlong risk-off trade. And it's still going on – last week Venture was up less than half that of the US markets. I like to think (hope) the current weakness is largely due to tax loss selling, since the juniors had such a bad year. The bulk of tax loss selling should be done in a week or 2. Once that's done, I expect the juniors to have a nice pop between mid-Dec & mid-Jan.

If we do have a decent Santa Claus rally in the juniors, Venture will finally break the downtrend line from last spring. The commodities index would likely do the same. I respect trend breaks – the longer the trend, the more I respect them. For example, Venture broke a long uptrend line in March – which has led to a multi-month downtrend. Since April, there have been a couple of minor breaks in the down trend line which led to brief rallies. I tried to play the one in June (4 week rally), but the early August plunge convinced me to raise cash again - new low means new downtrend line. But now, considering the length of the downtrend, when it breaks, it could lead to a playable multi-month rally. My original plan was to play for a year end rally and run for the hills in January, but if the downtrend does break, I might rethink the exit strategy, and play until May.