Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
The Greatest Investing Lesson Learned from the 1987 Stock Market Crash - 20th Oct 17
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17
Bitcoin Hits New All-Time High Above $5,000 As Lagarde Concedes Defeat and Jamie Demon Shuts Up - 13th Oct 17
Golden Age for GOLD, Dark Age for the Stock Market - 13th Oct 17
The Struggle for Bolivia Is About to Begin - 13th Oct 17
3 Reasons to Take Your Invoicing Process Mobile - 13th Oct 17
What Happens When Amey Fells All of a Streets Trees (Sheffield Tree Fellings) - Video - 13th Oct 17
Stock Market Charts Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why - 12th Oct 17
Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill - 12th Oct 17
Two Highly Recommended Books from Bob Prechter - 12th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

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