-- Posted Friday, 4 August 2006 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Friday, August 4, 2006

For investors who’d rather be smart than lucky 

Have stocks ever climbed a wall of worry so ostentatiously as they are climbing one now? Not that I can recall. With Iran threatening to goose oil prices to $200, all-out civil war erupting in Iraq, and Lebanon offering in microcosm all of the elements of a possible Third World War, investors somehow found ample reason yesterday to push the Dow Industrial Average 42 points higher. It surely wasn’t upbeat earnings reports that caused this; for in fact the tape brought yet more glum news from the corporate sector: layoffs at AOL, a bad July at Starbuck’s, huge losses at Ford, disappointing sales at Target, and widening concern among retailers and analysts that consumer spending is about to fall off the edge.

Wall Street’s apparent ability to take such things blissfully in stride suggests not so much cautious optimism as clinical insanity. Do bulls perhaps believe that the End of Days will produce the short squeeze that finally catapults the blue-chip average above 12000? We won’t deign to speculate on this, since we’ve learned that stocks can do just about anything on a given day  -- no matter what the news, and especially if the news gives rise to the kind of strong expectations that so often get knocked on their ass.

For our part, we were long in Citigroup, which not only gave up ground while most other stocks were rising, but actually bucked a bullish trend in banking-sector shares. Our straddle position will make us longer if Citi rallies and shorter if it plunges, but all of this staggering around will only test our patience. On the bright side, one of our very favorite death-watch stocks, Beazer Homes, became even more shortable by rising 1.68 points on the day. The gain in the last two weeks has been 23 percent, a ripening trend that is going to make Beazer the short-of-the-month if it continues for just another day or two. Keep your bulletin launcher open, since the opportune moment could come at any time of the day.

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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 

-- Posted Friday, 4 August 2006 | Digg This Article | Source: GoldSeek.com

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