-- Posted Wednesday, 23 May 2007 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Wednesday, May 23, 2007
“Phenomenally accurate forecasts”
With a U.S. recession just a statistical heartbeat away, any sane observer might conclude that the stock market is staging for a spectacular plunge. In fact, it is within mere hundreds of a point of opening up a lush new pasture for bulls. The chart below shows why this is so according to the Hidden Pivot system, the analytical method I use to avoid letting my innate bearishness blind me to the obvious.
In determining trend strength, the simple rule I use is that a rally leg must surpass two prior peaks to renew the trend and keep the bull healthy. Although the S&P 500 Index did not quite achieve this when it reached a new record high on Monday, it came within a mere 0.22 points of doing so.
A month earlier, the S&Ps easily surpassed the “internal” #1 peak, warning off any bears who intend to survive the “Stocks Gone Wild” lollapalooza of 2007. However, it remains for this key index to surpass the somewhat more daunting “external” peak #2 in order to clinch smooth sailing for at least the next several months.
This interpretation is somewhat unconventional in that most chartists are focused on the questions of whether the S&Ps will exceed the all-time high at 1552.87; it was recorded six months earlier than the one-off high I’ve flagged. But it is the lower peak that counts most in my estimation, and if it is exceeded without an intervening pullback of more than a week, that would all but guarantee that the bull will demolish the higher peak.
“Go away in May”? Not if the S&Ps hit 1530.10 before next Friday.
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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 Wednesday, 23 May 2007 | Digg This Article | Source: GoldSeek.com
