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-- Posted Thursday, 19 October 2006 | Digg This Article | Source: GoldSeek.com

Rick's Picks

Thursday, October 19, 2006

For investors who'd rather be smart than lucky

I'm not sure whether it was sent in jest, but I got a "say it-ain't-so-Joe" note from a friend yesterday bearing the following subject header:   Ackerman, Last Bear, Capitulates? The answer depends on whether you've been following my forecast for the stock market, which has been very bullish, at least for the near-to-intermediate term; or my forecast for the economy, which is about as bearish as predictions get. But capitulate? Hardly. Rather, I expect the economy to tank once the stock market has had its last fling, as it seems to be doing now. My forecast calls for a thousand-point rally in the Dow that should take at least 10-12 weeks to complete. The precise target is 13045, and it is derived from the chart below.

This chart had been staring me in the face for too long to ignore its bullish implications. I did so anyway, at least for a while, because the economy seemed like it was ready to implode. While this is indeed occurring, driven by a deteriorating real estate sector that is already too weakened to jump-start America's decade-long shopping binge, the mood of recession has not yet taken root. Nor can it as long as a handful of stocks are causing the Dow to make headline highs on a regular basis. This will cease at some point, we can be certain, but we should not make the error of thinking it must do so just because the reality of a housing bust and incipient recession are bearing down on us with irresistible force. It is quite clear that neither factor is significant in comparison to the powerful short-squeeze that continues to push the Dow average, if not much else, to new record highs. The squeeze is occurring because "everyone" thought the stock market was ripe for an October bust. Under the circumstances, who is left to sell?

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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 i ssues 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 expre ss written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com  

-- Posted Thursday, 19 October 2006 | Digg This Article | Source: GoldSeek.com

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