-- Posted Sunday, 10 December 2006 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Monday, December 11, 2006
“Phenomenally accurate forecasts”
Check out the chart below, which is complete through Friday. Is this an internet-stock-on-steroids – Google, perhaps? An oil company that just hit a gusher? A drug stock with a promising treatment for cancer? Guess again. The chart shows price action in the world’s largest bank, Citigroup. Even in the context of two years’ worth of ups and downs, Friday’s thrust looked pretty impressive. Citi shares reportedly were goosed by rumors that a management shakeup is coming, along with the possible sale of one or more businesses. How bullish is that? is a question that probably never occurred to those who bid up Citigroup shares by 2.3% in the space of a few hours, adding about $18 billion to its capitalization.
The fact that the rumors were not bearish on their face was probably enough to set shorts scrambling for cover. And Citi wasn’t the only banking behemoth that attracted speculative attention. Shares of Barclays PLC went nuts on the revived conjecture of a Merrill Lynch analyst that the British bank would soon get a takeover bid from Bank of America.
Citi #1 in Smoke-and-Mirrors
All of which bodes well for my prediction of a blowoff to 13045 in the Dow Industrials. The bank stocks have always stood to be standout performers in a global economy that has been powered far more by financial speculation than by manufacturing. The smoke-and-mirrors business is where the big money is nowadays, and Citi leads its fellow prestidigitators in that game by a mile. Ranked by profit and capitalization, no bank is bigger. And no businesses have benefited more than banks from the global monetary stimulus fomented by central banks in recent years.
The only puzzling feature of the bank stocks’ strength is that Citi, presumably a bellwether among bellwethers, has lagged the bunch. But with Friday’s big move, Citigroup shares appear to be making up for lost time. To the extent that corporate mergers, buybacks and acquisitions have, more than any other factor, fueled the stock market rally in recent years, imagine what a boost we’ll get now that this shell-game has seized the fancy of companies with assets ranging up to a trillion dollars or more. For those who have waited and waited for the stock market to make a top commensurate with the spectacular bull that has gone before it, there could not be a clearer sign that the blowoff has commenced in earnest. The Fat Lady, finally, is about to sing.
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London & Melbourne Seminars
I’ve had some requests to give a Hidden Pivot seminar in London, but not quite enough yet to make the trip worthwhile. If you’d be interested in attending a two-day class there, probably sometime in the spring of 2007, please let me know via e-mail, including your contact information. Also, the recent seminar in Sydney was so successful that I would like to repeat it in Melbourne provided there is sufficient demand. Click here if you think you might like to attend.
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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, 10 December 2006 | Digg This Article | Source: GoldSeek.com
