Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Short-term Rally to be followed by New Bear Market Low

Stock-Markets / Stocks Bear Market Nov 03, 2008 - 12:37 PM GMT

By: Christopher_Quigley

Stock-Markets Best Financial Markets Analysis ArticleThe American economy continues to contract. Construction levels are declining. Building permits, which are a gauge of future activity, fell to 786,000 in September from 857,000 in August. In September industrial production suffered its biggest decline since the recession of 1974-5. This broad based weakness suggests that the recession will be deep.


As mentioned last month we would like to see the Dow Industrial Index consolidate solidly at the 7500 range. The Bull/Bear battle continues to wage but if this level is grounded and tested over the next two to three months it would go a long way towards setting up the modalities required for a change in market psychology. While near we are not there yet. Volatility will continue.

 

In Europe the banking fallout continues to cause havoc throughout the Euro block, the emerging eastern markets and Russia. The fact that the European Commission's formula for putting together a pool of funds was rejected may indicate that the federal concept of the European Union may be well and truly dead in the water. What saved England, Germany and Ireland was intelligent and aggressive national action.

This indicates that international socialism has not yet totally replaced the Nation State as the model for economic success. Ideology does not pay bills, grounded value through work exchanged does . I would suggest that the new zeitgeist senses the weakness in the old global "conceptual" business model and smart people now know that national physical resources coupled with an educated and creative populace, producing real value is the way forward in an increasingly competitive world. The era of phony financial "wealth" is over. So too is the era of "Basel Leverage", as is the suicidal mentality that an economy paying 20 dollars an hour to its citizens should offer up its manifest destiny to a centralist "society" paying 20 cents an hour.

Once the reality sinks in that the true backing for the American dollar is the American people, their creativity, their work ethic and resources and brilliance in devising methods of exchange, then the political landscape moving forward will alter. With growing foreign political instability repatriation of funds will become a massive wave, with the American dollar benefiting. Protectionism is going to grow with a possible collapse of the Chinese economy a distinct possibility. The Wal-Mart model of doing business is going to come under pressure. The American people are finding new voice and voting with their dollars every day, as propounded by E.C. Riegel, rather than relying on the power of a vote every four years.

With the Presidential elections in the mix I would suggest that you have your powder available and ready for use. The market is so oversold that even if the bear is still vigorous there should be good market reaction to allow bulls to benefit. Again to reiterate the point if the market does not respond favourable after November, and breaks below the 7500 level, the 2009 recession will not have been properly priced into the market. A technical breakdown at this price point, which I think is probable, could bring the Dow Industrials down substantially further. Under such a juncture the Dow level of 1987 will be the next technical support target and this consciousness will place the market in the 6500 ball park area. Such a view works well with the fundamental fact that PE ratios are currently far too high for a protracted recessionary environment, even with the juiced inflation numbers which distorts sales numbers higher, but only nominally. Reality is beginning to bite which means folk are beginning to see through the hype.

However there is one issue which could completely alter the market reality. If the new administration successfully motivates the S.E.C. to regulate naked short selling, and review off-shore hedge fund activity, the true bear pressure caused to the market by this negative phenomenon may be finally released.

Monthly Stock Pick

Potash Corp. NYSE- POT 

 

Timelines: 2

PE: 5.7

Growth: 49%

ROI: 21%

Financials: A+

Potash Corporation of Saskatchewan is one of the world's largest integrated fertilizer companies, producing potash, nitrogen and phosphate products.

Potash Corp.'s share price has declined almost 60% since July. This harsh pullback is due to the sharp decline in the price for most staple food products, in particular grains. This, combined with a slowing global economy, has tempered investor sentiment.

However, despite this macro situation earnings continue to grow. New fertilizer contracts, signed last year, locked in higher prices for the first half of 2008. This momentum should continue and accordingly management have raised earnings guidance. Market dynamics should continue to favour the business through 2009.

Due to the bearish nature the board of the company have agreed to a substantial share buy-back programme. As a result, the integrated fertilizer producer will acquire nearly 32 million outstanding shares by next year.

All in all with market recovery this equity is a classic "value play" and offers considerable appreciation potential going forward.

Please study our risk management "trading rules" and disclaimer prior to taking any investment action.

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

© 2005-2019 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