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Trading Lessons

Financial Markets Monthly Analysis and Stock Pick

Stock-Markets / Financial Markets Sep 05, 2008 - 12:23 PM GMT

By: Christopher_Quigley

Stock-Markets

Best Financial Markets Analysis ArticleThe markets continue to be range bound with the Dow Jones Industrias bouncing between 11,000 and 11,750.

The S&P 500 is caught between the 1220 and the 1300 level. In both cases this containment has prevailed since July and indicates the lack of conviction by the major players. Obviously nobody is convinced yet that the credit crisis is over.


Another factor playing on the market is the American election, slated for November 4 th . Now that the conventions have come centre stage everybody is wondering how the elements in the economy will play out under a new administration. This again adds more uncertainty and risk. With earning due at the end of September my view at this stage is to move completely to the sidelines until clarity prevails.

We correctly predicted in our July brief that a correction in Oil was due. Despite a sizeable pull back general share prices have not received a sustainable boost, which again shows investor concern regarding overall economic strength.

While Gold and Silver have reached oversold levels I would not participate going long as the money metals could easily fall further in conjunction with Oil.

Overall the Dow Industrials indicate that the bear is ongoing however there is a non confirmation signal coming from the Dow Transports. Students will remember that for a true Dow Theory bear market signal to exist the Transports and the Industrials must confirm each other through consistent lower highs and lower lows.

A Dow Transport break below 4200 would indicate the bear is back in full swing. However, a break above 5400 would mean the bear is considering morphing into a bull. Once the election is over this may indeed occur.

For the moment the jury is out and the behaviour of the Transports supports my decision to say on the sidelines until I observe strong bullish or bearish engulfing patterns at the fore-mentioned levels.

Stock Pick - CB Richard Ellis

Ticker: CBG

This is a value contrarian play and should be placed on your watch list awaiting our technical buy signal.

The Richard Ellis Group is a global real estate services firm, offering services to occupiers, owners, lenders and investors in office, retail, multi-family, and other real estate assets.

The sub-prime crisis has had a major effect on the share price, which is nearly 75% off its 2007 high. Lower sales activity stemming from the deterioration in the global credit markets has had a pronounced effect on revenues and profits, both in the United States and abroad.

However solid margin recovery is expected over the horizon. The company's operations offer considerable future promise and indicate wide appreciation potential once the credit crisis abates.

Financial Strength: B+

Return On Capital: 19.5%

Earnings Growth: 25%

P/E Ratio: 6.7

Note: Always invest using our trading rules as set out on out web home page thus protecting you seed capital while locking in profits.

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.

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.


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