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-- Posted Sunday, 24 September 2006 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Monday, September 25, 2006

For investors who’d rather be smart than lucky 

Technical signs that a major top is in continue to accumulate, some of them ominously coincident with the autumn equinox and yesterday’s solar eclipse. On the S&P chart, MACD and relative strength indicators are flashing red, and support for Dow stocks is breaking down at the 10-day moving average.

So why am I cautiously bullish nonetheless?  Take a look at the chart below, because it contains some subtle, contrarian evidence that may be uniquely significant to Hidden Pivot analysis. Notice that last week’s highs slightly exceeded the price peak recorded in May. That created a bullish impulse leg of daily-chart magnitude, and its positive implications for the next few weeks or so will endure so long as the S&P does not soon plummet below the bottoms I’ve labeled #1 and #2.

Mind you, I’m not suggesting that anyone mortgage the farm to buy stocks at these levels. In fact, I lightened up myself on long positions at Friday’s close, selling shares or call options in Citi, Merrill Lynch and IBM, three of my high-beta favorites for playing whatever upside remains if there’s a short-squeeze blowoff in the offing. As I noted here a couple of days ago, a DJIA run-up to as high as 13045 is possible based on my technical runes.

If this is indeed about to occur, the reasons for it lie beyond my imagination, since it would be notwithstanding the evident, recent slippage of the housing sector and U.S. economy into incipient recession. Actually, I would feel relieved if the S&Ps were to plummet beneath lows #1 and #2 in the next 5-7 days, since that would square with the conventionally bearish technical picture, not to mention with my sense of reality. However, because last week’s highs exceeded May’s peak, I am obliged for now to treat any merely moderate decline such as we saw on Friday as prelude to one more thrust to new all-time highs.  

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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, 24 September 2006 | Digg This Article | Source: GoldSeek.com

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