Blog : State of the Market (March 1)

by Peter Leeds on March 1st, 2016

Just Released!

Our new tutorial video has just been posted!  Please give it a watch, and if enough people click "like," we'll start working on our next one.

Attention All Small Businesses!

We are proud to announce:  After decades of stock market analysis, we've recognized that what makes for a successful company is also what can create a successful small business.

Harnessing the wisdom we've gained over many years, combined with our love for clean and profitable businesses, we are extremely pleased to announce our involvement with The School for Small Business.

If you know of anyone running a small business, or planning to start one, please send them over to The School for Small Business.  The simple stages reveal how to make more in profits, while spending less time.

Every small business will benefit greatly, and quickly.

Coming this Month:

The revised edition of Penny Stocks for Dummies is slated to be one store shelves within weeks!  Make sure to snag your copy, to see all the added sections about investor manias and mass stampedes.  There is no better book about penny stocks, and it quickly became an international bestseller.

Dead Cat Bounce in Oil?

Don't read too much into the sudden resurgence of oil.  While these higher levels are most welcome for many industries, increases in the commodity's price will quickly be absorbed by greater production.

When prices decline, many marginal rigs can no longer pump without losing money, so they go idle.  We've seen the effects of this with 765 rigs shutting down in America over the last year, leaving only 502 in operation.

However, with each jump higher on oil prices, you'll see handfuls of rigs get up and running again.  This is not only an American phenomena, but rather it is a situation which is playing out on the worldwide stage.

Nations from Russia to Canada to Venezuela have temporarily constrained production, but will come back online to flood the market as soon as the underlying commodity prices recover.  That is why you will see oil prices rise on speculation, but not substance.  There is still far too much oil, and far too many nations chomping at the bit to throw their taps wide open.

In terms of speculation, much of the recent strength has been bound to recent cooperation among the major OPEC nations (plus their "enemy" Iran), who are moving towards a production freeze.  This is actually the global version of price fixing, which is illegal for any other product, but internationally there are no laws, nor could they be enforced anyway.

The day that a predominantly Shia nation (Iran) works with a predominantly Sunni nation (Saudi Arabia) will be a surprising one.  Even if the various Countries do claim to be working together, they will be producing as much as they possibly can behind the scenes.  This always happens, and in fact was the impetus/excuse for Iraq invading Kuwait many years ago.  

As well, nations in a situation like that of Venezuela right now, do not have any choice except to push supplies out into the Global market as fast as possible.  Inflation is running absolutely wild, store shelves are bare, and there is no food or medicine - all thanks to severely depressed oil prices.

Of course, in the extremely long term, there is far too little oil.  You can see that OilClock.com has global supplies running completely dry by 2068.

So, day by day, oil prices may jump around a bit, but they are likely to fall in the coming weeks.  In the medium term, prices may stay low.  However, whenever oil does fully recover, it will do so quickly and significantly.  Our very long term outlook if for $112 per barrel.