We knew it was going to happen. Heck, we had the canary in the coal mine, the volatility index, investor sentiment, and a host of other technical indicators all screaming it was time to get defensive. And the screams came just in time…

Last week, the Dow Jones Industrial Average, the Nasdaq Composite Index, and the S&P 500 all lost about 3.5%. The semiconductor index was down about 5%. Retail and financial stocks fell more than 6%. Brokers lost 7%. And homebuilders gave up 10%.

The bad news, of course, is it’s going to get worse.

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Here’s another look at the monthly chart of the S&P 500 plotted against its 20-month exponential moving average (EMA)…

If the S&P 500 is trading above the line, then stocks are in a bull market. If stocks are trading below the line, then the bear is in charge.

Stocks entered a bear market back in December. The S&P 500 declined for five straight months, and then put on a blistering two-month rally.

Today, the S&P is back up near the line. If history is any sort of a roadmap, then investors are in for a very long summer.

Take a look at what happened in the last bear market. Stocks broke down, rallied back up, and challenged the line… then cascaded lower again.

Get ready for the cascade.

Of course, stocks don’t go straight down. After such a nasty beating last week, stocks should enjoy a brief bounce higher early this week. In fact, the odds look pretty good that we may see the S&P rally back up and test the EMA at about 1,407.

At that point, though, traders ought to look at exiting long positions and adding on a few short sales.

Best regards and good trading,

Jeff Clark

Source: Warning: Trouble Ahead

It’s a former Portuguese colony and it’s sitting on the Southern Hemisphere’s biggest coal reserves.

With the price of oil soaring and demand from steel producers growing, those reserves are suddenly receiving a lot of attention.

Brazilian steel giant, Vale do Rio Doce, has already got the ball rolling….

It plans to spend $1.4 billion to build a giant coal mine at the heart of these lucrative reserves.

It’s a move that has opened the floodgates of investment money… countries all over the world are gagging to stake their claim!

And you can too. All it takes is a small investment in one strategically positioned stock. You see, this company owns billions of pounds of property around the tiny port that all this coal will need to be shipped through…

I’ll show how to get your hands on the exclusive details of this stock in just a moment. First, just think how profitable this could be…

Imagine investing in Russia or Saudi Arabia before they struck oil?

Practically overnight these countries were showered with investment capital. Oil workers and wealthy contractors poured into these regions sending land and property prices skyrocketing.

Well here’s a chance to buy into a similarly unique opportunity and “piggy-back” on the wealth this coal mine could create.

Where is the location of this valuable coal supply?

This valuable coal reserve is situated in Moatize, a town in Mozambique’s remote Tete province on the east coast of Africa… and the resources it holds is staggering.

The basin contains at least 2.4 billion tonnes of coking and thermal coal… so it serves both the steel and energy industries.

There’s enough in there to keep the mine going for the next 70 years!

No wonder Vale wants to get involved. And they’re not only ones!

Steel giant Arcelor-Mittal plans to purchase 35% of the Rio Minjova company, which owns coal exploration rights in Tete…

India’s Tata Steel, who have teamed-up with Australia’s Riversdale Mining, are currently conducting a feasibility study to produce coal from land which it the holds rights to…

So what’s the big deal?

The last great coal reserve in the world

To put it bluntly… global steel giants need this stuff. Demand is growing all over the world and companies are constantly on the hunt for new capacity.

All that demand has sent the price of coking coal soaring this year.

Japan’s just thrown their hat into the ring for Mozambique’s coal too.

Yesterday, Japanese company Nippon Steel, the world’s second-biggest maker of the metal, said it wants to buy a stake in Vale’s Moatize mine.

The firm’s being hit hard by rising material costs. Profit will fall 41% to a five-year low this year… and they’re desperately trying to keep costs down by investing in mines directly.

So this forgotten corner of the world is suddenly emerging as the new hotspot.

And there’s one simple reason why: Moatize is the last great unexploited coal reserve in the world.

For profit hunters, it only means one thing…

Boom times for Mozambique – and this one brilliantly positioned company!

Mozambique has just had one its best years since it won independence in 1975.

The country approved 186 foreign direct investment projects, worth USD 7.5 billion, last year… and it’s already home to the giant Mozal aluminium smelting plant – the second biggest in Africa.

But what we’re seeing here with its coal reserves is on a totally different scale.

Though getting that coal to market isn’t going to be easy… the coal mines are in the remote western province of Tete far from the port that can ship it out.

So the country is spending a massive amount – $170 million to be exact – on upgrading the historic Beira railway that will connect the coal mine to port.

Not only that they plan to spend another $40 million improving the facilities around the port as well.

Once the coal starts heading this way, this sleepy little corner of the Dark Continent looks set to become Africa’s latest boom town… and one brilliantly positioned company will welcome this investment with open arms.

It’s investors even more so.

How to get your piece of the action…

You’ll understand I’m obliged not to reveal the exact details of this white hot investment opportunity.

But there is a way you can access them straight away…

I’ve spent the best part of a year researching this company’s incredible story – it’s typical of what we at Profit Hunter call “special situation” investing.

If you’re willing to go right where the money is, this is definitely for you.

All the exclusive details are right here.

Regards,

Manraaj Singh
Editor
Profit Hunter

Source: Major New Coal Discovery!

For the tale of the tape, the TSX Exchange gave back 0.34%, while the TSX Gold Index lost another 0.9% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, lost 0.78% with the declining issuers swamping the advancers by a 605 to 424 margin on surging volume of 267 million shares traded.

Iamgold tabled a profit of $34.4 million, or $0.12 per share, for the first quarter of 2008. This was triple the $11.3 million or $0.04 cents a share tabled in the same period of 2007 as higher gold prices offset rising costs. Investors however, remain skeptical as shares of Iamgold ended the day up only C$0.05 at C$6.10.

Not to be outdone, Cameco reported first-quarter earnings of $133 million, up by 125% from a year ago as revenue increased to $593 million on higher prices for uranium and gold and an increase in uranium volumes. The World’s largest uranium miner tabled earnings of $0.37 per share compared with $59 million or $0.17 per share in the year-earlier period. Cameco ended the day up C$0.06 at C$40.34.

Midlands Minerals failed to attract interest after reporting that its fully-permitted, past-producing Sian project in Ghana hosts an indicated resource of 2.56 million tonnes grading 2.33 grams gold per tonne, plus an inferred resource of 2.69 million tonnes grading 2.35 grams gold per tonne. Midlands ended the day unchanged at C$0.24.

Coal continued to attract interest as evidenced by West Hawk Development, which inked a letter of intent to acquire and develop a coal mine and coalbed methane gas operation in Oklahoma and Arkansas. West Hawk ended the day up C$0.08 at C$0.33.

A stock to keep an eye on is Gabriel Resources as the company continues to try to get the huge Rosia Montana project in Romania back on track. Gabriel ended the day up C$0.37 at C$2.70 on nearly 11 million shares traded.

The United States dollar is showing signs of renewed strength but commodities are continuing to hold up well. We will see what Wednesday trading has in store.

Source: Resource Stock Roundup: Wednesday, May 14th, 2008 

Stocks bend to the breaking point, but refuse to snap. Instead, global equity markets tread water for a while…maybe bounce a little bit, but then roll-over yet again. So is this more of the same? I don’t think so. In fact, I’m seeing some signs that indicate a very profitable trading rally may be close at hand. Here’s why: My own personal “canary in the coal mine” indicator is quietly outperforming the S&P 500. That’s a potential BUY signal.

Keep your Eye on the Lagging Sectors

When every bull market breaks down and rolls over into a growling bear, there’s usually one key sector that leads the way down. In the last bear market, technology led the way down – especially internet shares.

In this bear market, it was clearly the housing sector that stumbled first. In fact, the Philadelphia (PHLX) Housing Sector Index peaked way back in the summer of 2005 (see graph above) while the rest of the stock market was soaring.

By mid-2006, the PHLX Housing Index was already down 20% from its peak – in bear-market territory! Of course a year after that, MOST of the major market indexes – both in the U.S. and globally – were also in decline. Housing started it all.

Most people aren’t aware of this. But as you can see in the chart above, so far this year the PHLX Housing Index is actually UP about 7% while the S&P 500 is DOWN about 7%.

That’s a major divergence for the stock market’s most beaten-down sector. It tells me that perhaps the worst is over for the industry that started this bear market.

If investors are already looking ahead to a recovery in housing, it stands to reason that the same thing should begin happening with other sectors too. In fact, I’m closely watching the beleaguered financial sector right now, because it’s next on my list for a potential bottom formation.

Bottom line: I doubt that this bear market is over just yet. In fact, the probabilities still suggest lower-lows. However, I’m watching closely for more signs of a powerful bear-market rally. It could ignite shares at any time, and provide some great short-term trading opportunities using call options.

MIKE BURNICK, Senior Editor & Global Market Analyst

P.S. Last week, I sent out a signal to subscribers of my Market Shock Trader service, telling them to buy call options on a leading player in the home mortgage market. I see big upside potential in this trade over the next few months. To get all the details, and a risk-free trial, just click here.