Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Waiting for the Stock Market Buy Signal

Stock-Markets / Investing 2009 Mar 09, 2009 - 03:47 PM GMT

By: Paul_J_Nolte

Stock-Markets Best Financial Markets Analysis ArticleIn what is getting be a nasty scratch in the record – the markets declined today…(skip) the markets declined today… What has been a nasty February is turning into a just as nasty March. While the employment report indicated hiring is not anywhere close to actually occurring, the revisions to the December and January data put the total “new” losses around 800k for the month. Outside of two other months over the past 80+ years, December, January and February are ranked in the top five for worst job losses.


Retail sales showed some life and consumer spending was actually higher for the first time in six months – so it wasn't all bad! However, Washington continues to fixate investors. The daily news briefing, the comments about the horrendous economy, floating the possibility of a new stimulus package (just after the second was signed) and little resolution to the banking crisis have kept investors from stepping into stocks with any confidence – in fact many are stepping away and vowing to never return. The super-sized economy and markets are looking more like mini-me!

Another week and another 5-7% shaved off the market averages – keep this up and another 10 weeks will result in a 50% loss for stocks! While we don't believe this to be the case, we remain nervous about the future stock returns with emotions so severely frayed. Our beginning of the year forecast was for a 5% return by yearend, however we allowed for a 20% up or down over the course of the year, and here we are with just over a 20% loss year to date. Even with that loss, we could see another 10% decline before “the bottom” is finally reached.

This will mean that the market will have dropped 62% from top to bottom, not only extraordinary in size but also in speed. We believe we are but a few weeks away from a buying opportunity that has been rarely seen. It is our contention that the money tossed at the economy and banks both here and around the world will finally begin to take hold and a violent rally could occur that would take stocks, by yearend, to the unchanged level. Given the math, another 10% decline would mean that a 50% rally would have to occur to get back to an annual breakeven. With many non-financial companies selling for (or below) valuations that have not been seen since the ‘73-74 bear market that saw stocks rise 50% over the following 18-month period.

The spastic and depressed stock market is giving some lift to bonds, albeit from extremely low levels. Commodity prices were relatively well behaved on the week, however energy prices are bumping up toward $45/bbl that has previously acted as a ceiling for prices. If oil (based upon a stronger China) does get above $45, we could easily see another 10% in energy prices that would once again put pressure on the bond market – forcing prices lower and yields higher. Energy is not the only worry for bond investors, especially Treasury holders, who should see huge issuance to cover the various financial handout programs already in place or in the process of being approved. We are buying maturities out to 5 years and are looking at inflation-protected notes as an alternative to “regular” bonds.

By Paul J. Nolte CFA
http://www.hinsdaleassociates.com
mailto:pnolte@hinsdaleassociates.com

Copyright © 2009 Paul J. Nolte - All Rights Reserved.
Paul J Nolte is Director of Investments at Hinsdale Associates of Hinsdale. His qualifications include : Chartered Financial Analyst (CFA) , and a Member Investment Analyst Society of Chicago.

Disclaimer - The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable, but are opinions and do not constitute a guarantee of present or future financial market conditions.

Paul J. Nolte 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