Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Dow 30k before End of 2020? - 13th Jul 20
Credit Market Investments Turned Into End-User Risk Again - 13th Jul 20
Investors Are Going All-In on This Coronavirus Proof Industry - 13th Jul 20
5 Vital Insights That You Can Gain From Instagram Trackers - 13th Jul 20
Stop Believing The 'Economy' Is The Same As The Stock Market - 12th Jul 20
Spotify Recealed as The “Next Netflix” - 12th Jul 20
Getting Ahead of the Game: What Determines the Prices of Oil? - 12th Jul 20
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

BP, Stock Market Trends and Quantitive Easing

Stock-Markets / Investing 2009 Mar 27, 2009 - 05:02 PM GMT

By: Christopher_Quigley

Stock-Markets Best Financial Markets Analysis ArticleFor those wondering why the stock market has exploded they might be interested in studying the chart below. This sets out clearly the proposition that the market has a long term correlation to currency in circulation (CinC). With the "Quantative Easing" policy now firmly in place it is quite possible that the "old heads" about the market know of this relationship. Thus regardless of fundamental issues they may sense the groundwork being laid for a technical recovery based on finance alone. Time will tell.


Chart of DJIA and Currency In Circulation 

The rally that began recently was long overdue as Stochastic, MACD and McClennan indices were all screaming "oversold". It is far too early to ascertain whether this rally has legs. With the earnings season now upon us it will be telling to see whether this positive trend can be successfully tested. If such is the case it would indicate that Mister Market is trying to earnestly find a bear base to sustain a change in trend. However, classic Dow theory tells us that "a trend is in place until otherwise proven." Thus this "rally" is a bear-counter-trend-move and investors should treat it as such. Therefore my advice for the last quarter prevails; this is a traders market not one for investors.

THEREFORE: Stocks should be chosen for their technical positions; hard sell stops should be used; once in a profitable position remain in it by raising your stop, therefore protecting gains; once you are stopped out do not re-enter until there is a significant pull-back that is supported.

I would champion this attitude to the market because the main indices have shown particular technical weakness. For example, this quarter, while the Dow 20 Transports successfully tested and held above the 2001, 2002 and 2003 lows, the Dow 30 Industrials shot below the 2003 support level, reaching an intra-day low of 6469. In my opinion, once this rally starts being tested, there could be a great deal of "whipsaw carnage" until a solid technical platform is secured. This has not occurred yet.

However there is one "fly in the ointment". My favorite QQQQ bellwether, Amazon, has recently shown fabulous strength. It has nearly doubled since late 2008. This could be the "canary in the mine shaft" indicating more investor confidence than otherwise reported. It remains to be seen if this sentiment can translate into broader market performance. Until this transpires keep your powder dry.

Should a market base develop, one area I would suggest looking at is the large real estate management arena. This area will explode, in a moment's notice, once a shred of evidence filters through that "Quantative Easing" and the "Toxic Bank" initiatives are working. It has been a long wait. Do not let the pain of the last year dull your pocket-book to the reality that all bear markets eventually die. The end to this bear will start with a significant rally that will be tested and supported and held. We might just experience such an event over the coming earnings season. Be aware, be alert, be prepared.

Stock Pick: BP

BP has put its house in order. Malfunctioning refineries in the United States have been repaired and are now running normally. Fourth-quarter volume rose nearly 8% sequentially, pointing to good momentum for 2009. The assumption is that profits will perk up again in 2010 on increased petroleum usage and a stronger economy.

Spending remains accelerated. Capital expenditures are currently slated to be 90% - 100% of 2008 high water mark.

This issue offers high income at current prices. The company is very strong financially, providing a level of assurance that the strong dividend will be maintained. This top quality equity also offers attractive total return potential going out to 1012-1014.

Return On Capital: 17.5 %
PE Ratio: 8.9
Financial Strength: A++
Dividend Yield: 9.8%

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.


Comments

Chuck LeBeau
28 Mar 09, 12:49
Temporary buy signal

I enjoy your comments and analysis.

Regarding the market direction - the weekly charts of the Dow Industrials just gave a rare but noteworthy buy signal this week. I use a combination of the ADX and the Parabolic. Rules for this signal are: ADX must be above both DI lines and also above 35. The buy is triggered when the downward sloping Parabolic is penetrated to the up side. A discussion of this pattern can be found on my web site at www.traderclub.com. This is the same pattern that gave a nice buy signal in November 2002.

Your advice about using hard sell stop orders is very appropriate these days. I would refer you to for appropriate stop levels on US stocks. For example the current stop on BP should be at $39.16.

Chuck LeBeau


Post Comment

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

6 Critical Money Making Rules