"Your closing statement on last night's audio went something along the lines of: 'now this reaction is going to hit the reset button eventually for the next move on the upside, which will probably commence gradually and then pick up steam overall, so I think that at some point, if it's not the 4th quarter, it'll be next year we'll get another interesting buying opportunity in a number of these commodities in which I will certainly want to participate, but in the short term we are more likely to see them weaken a bit further'

"Accepting that just about anything could happen, if you could you expand on the '4th qtr-next year' bit, it would be very helpful and much appreciated.

"Are you saying there is in your mind.
a. The possibility that the bottom of this correction will not present itself until the 4th qtr or next year.
b. That this correction could potentially be range bound, possibly with a downward bias until the '4th qtr or next year.
c. We could see some capitulation in the near term (days, or a few
weeks), then something resembling a summer rally to unwind the oversold condition, then more selling/ranging until the buying opportunity arrives in the 4th qtr or next year.

Finally, what time period do you normally allocate to short/medium/long term?

PS. I was amused by the subscriber who said he listened twice to the audio because he often falls asleep during his fist listening. I have a simple remedy to suggest. 'Stand Up' seriously, it works for me, I'm an hour ahead of the UK, but I love my bedtime Fuller Money noise deletion stories.

David Fuller's view Thanks for an email certain to be of interest to many other subscribers and I am happy to clarify my views.

First, however, starting with your post script, your advice will no doubt be appreciated but I personally would not want to deprive any subscriber of his much needed sleep. We take what we most need from a service.

Regarding your questions, prices for many stock markets and commodities have clearly entered the capitulation selling phase which I first predicted on return from holiday two weeks ago and have subsequently mentioned daily. This can be a stressful phase of a market cycle for many of us, and also any clients you may have, so it is important to remember that capitulation selling hastens the descent to the next important floor and buying opportunity. In chart terms, capitulation selling is acceleration and this soon becomes an ending of an unspecified duration.

In terms of the 'a, b, c' headings in the email above, there is not a great deal of difference. In other words, a majority of markets will probably move lower, a few may just range, and there is always the possibility of a summer rally, although this latter possibility is not something that I would bank on for 2011.

There is a big difference between the '4th qtr-next year' bit. I regard a decline into next year as very much an outside (minority) risk, requiring a perfect storm of utter chaos including the Greek debt situation leading to serious contagion; a US foreclosures crisis leading to another bank meltdown; an additional spike in crude oil and other commodities; a serious exogenous event.

The first three are valid concerns and the exogenous event would be a rare instance of extremely bad luck. The first two are ongoing concerns of which the Greek / European periphery country debt currently appears to be the greatest problem, being unsolvable anytime soon although it can and probably will be contained, without the feared 'Lehman moment'. Another spike in crude oil and other commodities would be the most damaging problem globally but following the latest downward dynamics (Brent & WTI) this appears to be a diminishing risk over the short and hopefully medium term.

Consequently, I remain hopeful that most stock markets will bottom and show evidence of support building within the next one to three months, creating good buying opportunities for 4Q 2011 recoveries extending into 1Q 2012, at least. Meanwhile, the most favourable background conditions would be a further decline in commodity prices, not least for crude oil, and an end to monetary tightening in both China and India.

Please note - In the assessment above, I have sketched a roadmap with some key variables. I hope you find this helpful. Many of you will have your own similar or varied scripts. What we should now do, I suggest, is monitor the charts to follow the course more precisely, wherever it leads because no one knows the future.

Meanwhile, expect to see and hear an increasing number of bearish forecasts as markets move towards sustainable lows. You have seen it before and it always happens in downturns which cause pundits to extrapolate and express their worst fears. It is also part of the game because fear sells by garnering media attention. Sentiment is never more bearish than at a market low - think about it.