-- Posted Sunday, 4 February 2007 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Monday, February 5, 2007
“Phenomenally accurate forecasts”
For those betting on a soft landing, Friday’s statistics were the stuff of wet dreams, so blissfully sub-par that you might think the U.S. economy was smoking opium. A slight uptick in joblessness and hourly earnings was gently offset by weak payroll numbers and a six-minute decrease in the average work week. All in all, it was a pretty mellow mix of yin and yang, considering there’s a housing bust under way that could implode the U.S. economy and cut global output in half. Such grim prospects obviously were not troubling Wall Streeters on Friday. Far from it. Take a look at what those crazed, zany bulls were doing to the shares of homebuilder D.R. Horton:
Some party, eh? As the chart below suggests, this was no one-week wonder either. D.R. Horton’s shares have been on a tear since November, goosed in contrarian fashion by bad news from the housing sector and perhaps inspired by the old saw that, where wild-eyed investment manias are concerned, too much of a bad thing is never enough. Fortunately, as fatalistic as Rick’s Picks has been in forecasting the housing sector, we’ve managed to dodge this bullet and others of its ilk as the homebuilders’ shares have wafted back toward respectability. We were actually long DHI shares before Christmas, by way of some January call options, but we exited them for a small profit after misreading an ugly one-day decline as the possible beginning of something worse.
The price action in Horton is the sort of thing that could drive a permabear into therapy. Given the relentless pace of bad news in the housing sector, shouldn’t the stock be plummeting into the low teens by now? Apparently not. Good thing we didn’t have a crystal ball last Spring, since even a glimpse of today’s housing-news headlines might have induced us to short the homebuilders’ stocks until our proverbial heads caved in. Lest bulls grow insufferably giddy over their bizarre run of good fortune, let me mention that DHI shares are coming up on two Hidden Pivot rally targets that could stop this insanity cold. The first, just 22 cents above Friday’s high, lies at 31.35; the second, at 31.79. If I were you, I’d take the money and run. But in any event, you are warned.
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Seminars in Atlanta, Boca
I’ve received numerous requests to offer Hidden Pivot seminars in Atlanta, Georgia, and Boca Raton, Florida. I will do so if there is sufficient demand, so please let me know if you would be seriously interested in attending in either place. The two-day class would probably be held sometime in the spring of 2007. Contact me via e-mail, including your contact information and choice of locales. The cost would be $1,500 USD.
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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, 4 February 2007 | Digg This Article | Source: GoldSeek.com
