Al, money is pouring out of resource stocks like lava from an...

Al, money is pouring out of resource stocks like lava from an active volcano, it is just relentless stuff. Last night I was watching the DOW and the yanks were getting excited because the loses reported by banks weren’t as bad as analysts had predicted, totally ignoring more negative economic data that had been published yesterday, heck these US banks are still locking in Billion Dollar plus losses.

The market clearly has not found the floor as most stocks are finding new lows on a daily / weekly basis and the main reason is that the impacts of this credit crisis / US recession will have on Asia and more importantly India / China. What we need to factor in now is a slow down of economic growth in China, as this credit crisis / US recession spreads across the globe.

To be honest PNA is a much easier a stock to predict as it’s a one mine, copper driven company. BHP the world’s biggest diversified miner has underperformed even the most experienced research analyst’s share price predictions as they have in error had a buy on BHP even when the stock was $50.

IMO the key element is what's going to trigger a turn around in the consumption of raw materials? There will need to be a steady flow of good news to assist the resource sector and bring confidence back in. I really can’t see a steady flow of positive economic data coming over the short term from the US or Europe for that matter, so BHP is now testing its support levels like PNA was doing when the share price hit 30c

Like PNA I expect BHP to also break its support at $24 and we will see teens for sure, a price target would be around $15 to $18 that’s another 25% drop from today’s close which is not totally out of the question if the DOW pulls back to 7250 points and the expected slow down in the developing nations is confirmed.

Interesting times ahead.