Down at half time, small caps come out firing in July

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Is this the end?

...Of a weeks long horror run for small ASX stocks?

Everything was pretty despondent just a few days ago...

But all that was forgotten the last couple of days.

July has arrived, and as we predicted, shows early signs towards ending the traditionally not-very-fun market months of May and June.

Here’s what happened (and what we think is ABOUT to happen next... spoiler alert: it's good).

After multiple, months long bullish patches - things first started to get a bit shaky in May:

Then June hit.

And here is what June looked like for the small end of the markets:

In the lead up to and during June, just about everything that could pile in on small cap sentiment... did:

• The Iran conflict
• The US rate-hike threat
• Chalmers' tax changes
• Commodities rolling over
• A precious metals correction
• "Sell in May and go away"

And finishing off with a few grotesque crotch shots while the markets were down from June tax-loss selling

We called out the June tax loss selling that would go on for most of the month.

Made worse by the fact that people had made money (i.e. locked in capital gains) during the financial year.

So any stock that they bought during the FY that was lower than where they purchased was in the cross hairs to be sold to offset gains elsewhere.

We made a prediction that from July, it would get better:

(source - Us 4 weeks ago)

We also called out that this June/July is different to the last few years.

The bullish runs we saw this FY allowed most companies to raise decent amounts of cash to do stuff.

Cash they either still have OR have spent some of to become pregnant with news yet to be released.

(as opposed to the grinding bear market from mid 2022 to 2025 when every company was broke AF, and there was nothing for anyone to look forward to - why would anyone buy shares?)

June this year seemed worse, mainly because it started from a positive place.

(unlike previous Junes which had been “just another typical, consecutive month of pain and suffering” - we were all match fit to absorb the punishment)

July finally arrived ~74 hours ago...

Day one was a stand off (another failed “the markets will rip from July” prediction?)

BUT - the last two trading days have been glorious, glorious green almost across the board (watchlist).

Smacked down small cap stocks rising together from artificially compressed bases as the post June tax loss bargain hunters swoop in:

And then yesterday the market had one of the best days we have seen in a few months.

And just like that, ASX small caps are awake again...

(we saw 10-15 announcements out on Wednesday and Thursday alone across our Portfolio - a usual day there is no more than 2-3... you can read our takes on the material ones in tomorrow’s email)

Companies usually tend to go fairly quiet when the market isn’t responding to anything.

And then fire up when they see a bit of life and volumes.

Plus (to help things along) we had a couple of lucky extra bonuses which helped along the small end of the ASX.

Gold was up 4.2% in the first 3 days of July (helping all our gold stocks)

Silver was up 7.4% (helping our silver stocks)

Yesterday's weaker jobs data out of the USA hosed down the US rate hike threat (US market mood directly impact risk on ASX smalls)

We also think Donald Trump is going to run the stock market and economy hot into the November US mid term elections.

Stock market up, economy hot = voters happy, incumbent wins.

(also = positive sentiment flows around the world, including ASX small caps)

This also explains the sudden US rush to end the Iran conflict...

November is just 4 months away.

4 months to run up the markets.

Buckle up for what we hope will be a big few months of positivity...

Silver up 7.4% in the first 3 days of July, all our silver stocks have had a good couple of days.

Spare a thought for our silver stock AVM who announced an unexpected ~55m copper hit mixed in with some high grade silver hits at their 22.4Moz silver deposit...

Just 24 hours before all the market positivity started (read about it here).

An announcement like this would have put a rocket under AVM if it had been released a few months ago, instead of a few days ago when everyone was feeling sad about copper and silver.

(AVM did make some nice moves up in the days after the announcement when all the good July stuff started happening)

Putting the silver price rise in context, it’s hopefully the (early) start of a move back up:

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Ok, fine so it's just a little bounce off recent lows in the grand scheme of things, but we’ll take it.

7 days ago, in the depth of silver's “lowest point since December 2025” we said:

We hold a LOT of gold and silver stocks, and have been holding the vast majority of our positions (even during the January precious metals peak) - we think the main precious metals run is still coming so are hanging on for that.

(you can view all of our live holdings here)

This is definitely not personal investment advice (maybe we should have taken more off the table in January?).

Time will reveal if we are geniuses or idiots.

The silver pop over the last few days has turned the dial a notch away from idiots.

But a few days does not a determination make.

Our wait and hold continues... but is feeling a lot better over the last 48 hours.

Who would have thought I’d be distraught to see silver touch ~$56 last week?

I spent literal years watching and praying for it to move above $30.

And until just 8 months ago it had NEVER EVER been above $50.

Also out this week, our favourite USA venture capitalist, billionaire, markets pundit and US mega tech capital influencer Chamath Palihapitiya released a deep dive on precious metals:

(source)

First he provided a deep dive on critical metals needed by the USA... yesterday it was precious metals.

Another valuable push to help gold and silver to go mainstream.

ILA in trading halt - Tuesday could be big...

Remember ~6 weeks ago we wrote about the major Ebola outbreak happening in Central Africa?

The rare strain that is hard to detect and has no approved treatment?

(source)(source)(source)(source)(source)(source)

And that historical data from ILA’s drug “Galidesivir” showed it was 100% effective against Ebola inside the first 48 hours in non-human primates?

(read it here)

ILA went into a trading halt yesterday, pending an announcement relating to “the use of Galidesivir in a clinical trial in Ebola in Africa”

(read the trading halt announcement here)

We don't really know what this could mean from the one liner provided by ILA.

(well we can take some guesses based on careful analysis of the words in that announcement, but in any case we will all find out a whole lot more when it comes out of halt on Tuesday at the latest)

But what we DO know is that the current Ebola outbreak in Africa is extremely serious AND a rare hard to detect and untreatable Bundibugyo strain.

We also dug out this from a previous Ebola epidemic in 2018-19 in central Africa:

“Ebanga” (a drug for treating the Zaire strain of Ebola) was tested in the middle of a live outbreak - the 2018-19 DRC epidemic - not in a lab somewhere safe. (source)

The result: Patients who got it died 35% of the time. Patients who did NOT get it died 49% of the time. (source)

That ~14% drop in death rate was enough to convince the US government to approve it in 2020. (source)

And it was enough to hand the company a contract worth up to $704M - mostly to stockpile the drug for the next outbreak.

(source)

It sounds like ILA's Galidesivir could be about to get tested in the same brutal, real-world conditions - an active Ebola outbreak in the DRC, right now.

If ILA’s Galidesivir can beat Ebanga's number - or even just match it, there is a precedent for big stockpiling deals being handed over for a treatment.

This isn’t the first time ILA’s drug has been tested against Ebola either.

During the largest ever Ebola outbreak in history (2014 to 2016, 11,300 deaths) the drug ILA owns now (Galidesivir) was trialled as an Ebola treatment with US government funding, developing it in US military controlled laboratories.

(US military? That’s because Ebola is a highly weaponisable virus...)

Animal trials were run and the drug showed it was 100% effective against Ebola inside the first 48 hours.

(the drug also has positive Phase 1 clinical human safety data - so its been tested in humans too)

(source)

Then US government funding expired, the previous owners of the drug pivoted to rare diseases... and they sold the drug to ILA...

We covered the background of ILA’s drug in detail in our last note here.

In that article we also said:

(source - Our 18th May Deep Dive article)

Then in June when ILA secured more supply of its drug we said the following in a Quick Take:

(source - Our 4th June Quick Take)

It looks like it's happening... now the long wait till Tuesday to see what comes of the trading halt...

Have a great weekend.

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