Rick’s Picks

Friday, June 16, 2006

For investors who’d rather be smart than lucky 

Another bear-squeeze like yesterday’s and some key stocks will be back up to levels worth shorting. Citigroup, for one. It soared like a condor yesterday, powered by bears who evidently stayed one day too long at the party. Here’s what the day’s action looked like 30 minute before the close:

The gap on the opening was pretty standard stuff, but it became a sustainable gap later in the session when Helicopter Ben said something in public that evidently could not be construed as hawkish on interest rates. Small wonder, then, that the smoke-and-mirrors sector of the economy, led by Citi shares, waxed exuberant as the day wore on.

You may recall that we were looking to short Citigroup shares a couple of weeks ago when it climbed above $50. For anyone who has laid out Citi stock above that price in the last six years, it would have been hard to lose money; nor do we expect to. Actually, I’m not concerned so much about getting short-squeezed above $50 as I am about possibly missing the trade because the stock has died just short of that threshold. Last time, recall, we were fixated on shorting a hidden-pivot target at 52.00 when Citi sputtered out far below, at 50.41.

A Flying Pig

No one ever said it would be easy to short a flying pig like this one, though. Typically, the most enticing shorts make their tops either with parabolic spikes  that are all but unshortable; or by way of a wedge formation that tortures and mutilates bears who have piled on too early. In Citi’s case, the wedge is being made more menacing by swoons such as the one we saw this week.

No matter what the stock does, we cannot allow our confidence to fail us now, since the jig really and truly is up for the bank stocks. Citi may have gotten goosed hard yesterday, but above is a chart the shows the real trend, manifest in Wednesday’s decisive breakdown of the Bank Sector Index below. The impulse leg that I’ve highlighted in yellow breached, without a pause, no fewer than seven prior lows on the daily. The Index would have to fall beneath a May low at 90.62 to officially announce a bear market to the world, but signs evident at this moment strongly imply that it’s only a matter of time.    

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Learn My Secrets

Would you like to be able to forecast trends and price reversals as accurately and confidently as Rick’s Picks? Have you tried other trading systems, only to find them too complicated or otherwise unhelpful? Then don’t miss my Hidden Pivot Seminar this autumn in New York City. Plans are firming for a weekend session in mid-October, so please let me know via e-mail if you think you might attend. This will be a no-frills version of the course that I gave in Denver, offered at a significant saving over the original price.

There will probably be just one more session offered after that on the West Coast, but that would be the last for a long while. The course includes post-grad mentoring via a chat group that some of my former students have set up. If you’ve been impressed with the accuracy of my forecasts, this is an opportunity you cannot afford to pass up. Let me hear from you soon, since seat space is limited.

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com