Martinrea International Inc. (MRE)

August 10, 2016 - The long anticipated correction, or at least consolidation, in metals stocks appears to have started with the S&P/TSX Composite Gold down 0.5% in the week ended August 5th, and down 4.5% for the previous 30 days as of Friday. We started reporting to subscribers in May that insiders were positioning for a pullback noting that insiders had picked up their selling as we headed into summer which is a traditionally weak period for gold. Indeed, according to Equityclock.com, June and August tend to be the roughest months for the gold price before entering into a seasonally strong fall.

 What are we looking for?

We are in the traditional Santa Claus rally season when stocks tend to rally after tax-loss selling abates.

Since beaten-down shares are prime candidates for a Santa rebound, today we are looking for the 15 top ranked INK Edge names that have the worst price performance. While there is no guarantee that the Grinch won’t steal the show and send stocks lower, today we assume that Santa will arrive on schedule.

As we suggested in our INK subscriber Monday market comments, we expect market participants to be fixated on what Fed vice-chair Stanley Fischer says about inflation at a key speech to be given at the end of this week in Jackson Hole, Wyoming. For more than a year we have been writing about the Fed's failure to achieve its annual inflation rate objective of 2%. The Fed's chickens are coming home to roost as market participants are calling the institution out on its claim to be working towards that 2% aim. So why are insiders buying?

It never ceases to amaze us how much attention is given to consumer sentiment surveys south of the border. On Friday, a widely followed sentiment survey was released that indicated American consumer sentiment had dropped. Only a month ago that same survey indicated that consumer confidence was soaring, hitting its second highest point since 2007 according to Business Insider. More remarkably, this same survey hit an 11-year high in January of this year according to Thomson Reuters.