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-- Posted Monday, 7 August 2006 | Digg This Article | Source: GoldSeek.com
Rick’s Picks Monday, August 7 2006 For investors who’d rather be smart than lucky Stocks finished slightly lower on Friday, a fact that could have satisfied neither bulls nor bears. Although each had a chance to carry the day, in the end only the canniest of opportunists could have come out ahead. Da Boyz raped buyers on the opening simply by stepping aside for the first fifteen minutes or so, letting stocks waft into bull-trap territory. Panicky shorts did all of the heavy lifting, scrambling to cover positions that gapped awry on weak payroll data. Is the Fed going to pause? Whatever the answer, for more than a year bulls have been milking the question for all it’s worth, and an observer could be pardoned for losing count of how many times, usually on a Friday, stocks have exploded on speculation that the years-long “tightening” cycle was about to end. We should ask, how pathetic is an economy that needs massive doses of easy credit just to stay afloat? Or this: How woefully misguided are those who would assert, as many otherwise intelligent investors do, that the economy is in good health?
When the dust settled on Friday, the indexes had given up all of their opening hour gains, plus a little. Will we see renewed strength on Monday, as I predicted in an intraday bulletin? I now suspect not, even though the day began with a bang-up rally that breached an important hidden-pivot resistance in the S&Ps. I had been looking for a top at exactly 1291.50, basis the E-Mini, and we initiated a small short there with a tight stop-loss. But when the futures blew past my pivot by six points, it looked liked bulls were ready to romp into the weekend.
It was not to be, however, and the subsequent selloff left me skeptical that buyers will be able to muster sufficient enthusiasm next week to muscle aside all of the bad news. Whatever happens, I’ll need to remind myself come Monday that even a little greed is too much in a market that seems unable to sustain a trend for more than about 90 minutes. We could have exited some Citi September 50 calls for twice what we paid for them just a few days earlier, but by holding out for that extra nickel, we lost the opportunity. It was through no fault of our own, though, that we failed to buy a dozen Beazer November 40 puts for 1.50 as planned. I’d recommended doing so in Friday’s Touts, but someone who evidently was aware of our bid stepped ahead of us on the opening and bought 40 of them for 1.55 while the stock feinted strength. They were 2.00 at the close, and I doubt we’ll get another chance to buy them for as little as 1.50, since the short-squeeze that caused Beazer to gap sharply higher for a few deceptive moments will likely have wrung out the last die-hard bears. ***
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 Monday, 7 August 2006 | Digg This Article | Source: GoldSeek.com
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