-- Posted Tuesday, 8 August 2006 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Tuesday, August 8 2006

For investors who’d rather be smart than lucky 

Sellers were even meeker than usual yesterday, wary of  setting themselves up for a goosing ahead of  today’s Fed announcement. Futures markets were indicating a more-than-80 percent probability that the central bank won’t raise administered rates above their current 5.25%. If so, it would mark the end of a tightening cycle that has persisted through seventeen straight meetings of the Open Market Committee.

A contrarian might infer that it’s time to sell stocks on the news, since rumors and speculation about a possible end to tightening have been stoking buyers since around last autumn. But given yesterday’s very moderate selling, it would appear that few traders wanted to stick their necks out just to be positioned against the herd. In fact, considering that crude oil prices rose nearly $3 since Friday’s close, we should probably infer that stocks are fixing to surge on just about any news.

Ordinarily, a $3 jump in the price of a barrel of oil would send stocks sharply lower. In fact, the Dow Industrials were off just 20 points on the day, showing the kind of resilience that should make any bear think twice about laying out shorts. For those who are perhaps waiting for the chance to do so at higher prices, I have no compelling hidden-pivot targets to offer. What’s more, you can see in the chart above how Friday’s rally created a quite impressive impulse leg on the daily chart, surpassing two distinctive prior peaks. This is a robustly bullish sign, and it must be heeded no matter how many good reasons we can come up with for hating stocks at these levels. In fact, to negate the buy signal shown in the chart, the Dow would need to plummet beneath 10838 over the next week or so. Anything’s possible, of course, but I wouldn’t bet on it.

***

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 Tuesday, 8 August 2006 | Digg This Article | Source: GoldSeek.com

Previous Articles by Rick Ackerman

© 1995 - 2019

Live GoldSeek Visitor Map | Disclaimer