Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Is the Tech Stock Market Bloodbath is Finally Here? - 28th Jun 17
Crude Oil Sinks 20%: Why "Oversupply" Isn't the Half of It - 28th Jun 17
Important Money Management Tips For Teenagers - 28th Jun 17
The Coming Battery Bonanza - 28th Jun 17
Overlooked Stock Investments To Keep An Eye On in 2017 - 27th Jun 17
The Federal Reserve And Drug Addiction – A Prediction - 27th Jun 17
Charts Show Why Emerging Markets Will Be an Essential Part of Your Portfolio Going Forward - 27th Jun 17
Former Lehman Brothers Trader: I Bet My Reputation That Stocks Bubble Will Pop In A Year - 27th Jun 17
US Bonds and Related Market Indicators - 27th Jun 17
Stocks At Record Highs: Market Sentiment Still Bullish - 27th Jun 17
Stock Market Running Out of Steam - 27th Jun 17
Gold Back With A Vengeance As Bitcoin Bubble Bursts - 26th Jun 17
Crude Oil Trade & Nasdaq QQQ Update - 26th Jun 17
Gold and Silver Ongoing Consolidation May End Soon - 25th Jun 17
Dollar May Become “Local Currency of the U.S.” Only - 25th Jun 17
Sheffield Great Flood of 2007, 10 Years On - Unique Timeline of What Happened - 24th Jun 17
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

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

© 2005-2017 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

Catching a Falling Financial Knife