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-- Posted Sunday, 17 September 2006 | Digg This Article | Source: GoldSeek.com
Rick’s Picks Monday, September 18, 2006 For investors who’d rather be smart than lucky Considering the viciousness of the short-squeeze on September put options that bears just endured, we might well ask what lies in store for us in October? Logic suggests that if the pessimists were willing to bet heavily on a September crash, as they evidently were, then they will bet even more aggressively on a crash in October, historically the worst month for stocks. If so, the stock-market downturn that so many of us have been expecting, particularly those of us who have closely tracked the scary decline in real estate prices, could conceivably turn into a spectacular, last-gasp rally – the Mother of All Bear Traps, if you will.
I pondered this unsettling possibility after receiving a query from a friend of mine who runs a very popular, gold-oriented Web site. Is Dow 16500 possible, he asked, based on the inverted head-and-shoulders pattern shown below?
Truth to tell, I’m not much for head-and-shoulders formations, since its is a pattern that pops up just about everywhere one looks for it. However, the inversion show in the chart does indeed “count” to somewhere above 16000, even if there is no corresponding Hidden Pivot target I can find that is much above 13,000. So what about 13000? asked my friend. Well, I replied, if I can contrive to ignore every instinctual bone in my body, and to curse logic itself as the enemy of successful investing, then there is indeed a case to be made for Dow 13000 – or to be more precise, Dow 13045, as shown in the chart below. While this may seem highly improbable to those of us who believe a deep recession has already begun, a purely mechanical reading of the available technical evidence suggests that a 1500-point rally in the Dow over the next several months is a prospect that cannot, and should not, be ruled out.
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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 Sunday, 17 September 2006 | Digg This Article | Source: GoldSeek.com
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