Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18
Big Cap US Stocks Fundamentals - 13th Apr 18
Jaguar Land Rover Cuts 1000 Jobs on Diesel Sales Slump, Long-term Discovery Sport Review - 13th Apr 18
Stock Market SPX May Tangle with the 50-day MA - 13th Apr 18
Longtanding Chinese War: Intrigue & Betrayal - 13th Apr 18
How I Own My Gold - 13th Apr 18
ISupply Energy Consumer Warning - Never Put Your Account Into Credit! - 13th Apr 18
SPX Resistance May Prompt A Massive Short Squeeze - 12th Apr 18
Stock Market High Volatility is Not Consistently Bearish for Stocks - 12th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

Quarterly Stock Market Outlook and RDSA Stock Pick

Stock-Markets / Stock Markets 2010 Jan 10, 2010 - 11:10 AM GMT

By: Christopher_Quigley

Stock-Markets

Best Financial Markets Analysis ArticleThe market is currently trying to find its bearings after the spectacular run up since March 2009.

On a weekly chart the Dow Industrials and Dow Transports both indicate a definite technical consolidation line being formed. The longer the averages remain in their respective November and December ranges the more the the market will discount the March rise and focus on the new support point.


According to Hamilton the greater the duration of this “line of consolidation” the more significant the direction of the trend on “breakout.” On probability the market will move North, once the earnings season indicates there are no major surprises in the offing. However, how quickly the averages approach previous highs is anyones guess but price movement is bound to be choppy due to all of the following:

A:          Will future earnings eventually justify such rich valuations.
B:          When rates start rising will the hikes be benign or aggressive due to explosive inflation.
C:          Will the Real Estate, Financial & Banking sectors “tank” on rate hikes.
D:          When will unemployment stabilise and improve.
E:           Has the market discounted tax hikes.

As always the market must try to discount such uncertainty but given the mix I see above average risk in the martket given the weak underlying fundamentals.Therefore I am happy to advise clients to hold onto their fabulous 2009 gains and await a clearer economic tablet or a powerful technical indicator.

Some folk recommend Gold or Silver but again I see major institutional manipulation which makes a traders life a misery. Trading gold makes good fundamental sense but in actuality the technical picture has been muddied by paper gold in the form of ETFs, so I have moved on.

The situation since March provides all the emanations that TARP funds found a home in equities. In other words the fix was in. The wonderful gains thus far have given “banks” great profits to repay congress borrowed funds. I use the word bank with great delicacy because they are in effect derivitave traders. For this reason the TARP funds were not used to “stimulate” the real economy and therefore cannot be found in credit card account funding or car finance deals or property mortgages or business overdrafts (no that would be too much work and risk).

The funds are in hyper leveraged instruments, cross purchased. Thus this is a synthetic bull run, hence the spectacular market rise. The sooner congress realises this the sooner the true American economy can regenerate. When will it be accepted in honour and faith that the key to recovery was, is, and will be small enterprise. History educates that small entrepreneurs create 80% of ALL NEW JOBS in America. Support them and all will go well.  Ignore them and a double dip correction will prove inevitable due  to sustained  high unemployment.

I don’t know if any of you noticed but over the Christmas, during a 7 day period, short term interest rates shot up 600% from .01% to .07% and long term rates jumped 25%. In the first days of the new year they were pulled back but short rates are sill up 200%.  This volality indicates the fact that the FED has a major job on its hands holding the “balanced quantatitative easing” story together. A lot is riding on the holding of rates down and if anyone drops the PR ball there will be hell to pay. Ergo the market is risky until the jobs situation shows definite unmanipulated improvement.

Stock Pick: RDSA: Royal Dutch Shell plc.

Royal Dutch has regained about half of the ground lost since their 2008 peak, supported by a partial recovery in oil prices.

The refining, chemicals and natural gas lines have not snapped back as quickly as the oil pumpimg business. However, efficiency measures have been implemented and Shell is targeting a return to growth before too long.


Expansion is on track for the oil and gas exploration business in 2011, when a couple of extra large gas projects in Qatar are due to come on stream. These top quality ADRs should appeal to conservative investors. While the issue is untimely strong dividend income underpins the good long-term total return potential that we envision.

Fundamentals:
Dividend Yield:                5.5%
Financial strength:          A++
PE Ratio:                          11.0
Return On Cap:                12.5%  

By Christopher M. Quigley
B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley is 46 years of age and holds a Batchelor Degree in Management from Trinity College/College of Commerce, Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the Stock Market in San Francisco, California where he lived for 6 years. Now based in Dublin, Mr. Quigley actively trades utilising the principles set out in the modules above. This Wealthbuilder course has been developed over the last 9 years as a result of research, study, experience and successful application.

© 2010 Copyright Christopher M. Quigley - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Christopher M. Quigley Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules