-- Posted Tuesday, 24 July 2007 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Tuesday, July 24, 2007
“Phenomenally accurate forecasts”
Is anyone else creeped out by the fact that financial stocks have failed to get in gear with the supposed bull market? We savored this ominous divergence first-hand yesterday when we went bottom-fishing in the shares of Wachovia [NYSE symbol: WB]. For the last couple of weeks, we’ve been expecting WB to fall to exactly 49.11, a Hidden Pivot support. However, a short squeeze intervened, testing our patience as it pushed the stock to 53.02 on July 13. We’ve been waiting ever since to get long at our price and were finally able to do so yesterday. However, Wachovia looked so dismal as to make us wonder whether we should be more careful about what we wish for.
Actually, for Wachovia shareholders, the day didn’t start out too badly. In the opening minutes of the session, WB gapped to a high at 50.44 that was 46 cents above Friday’s settlement price. But the rally quickly faded, and the stock fell hard after DaBoyz finished raping those who had gotten long at the opening bell using market orders. For anyone who mistook the early action for real strength, the day could have been a disaster. By the final bell the stock had fallen $1.68 below the intraday peak and a whopping $3.74 below the equally spurious peak created by last Friday’s gap-up opening.
Mind you, Wachovia is not among those companies whose Q2 numbers have disappointed the Street; in fact, profits reported on Friday were up by 24 percent. But forward-looking investors noticed not the scintillating performance of months past, but the problems likely to attend Wachovia’s recently expanded mortgage portfolio as the housing market has continued to weaken. Similarly, the shares of Citi, no slouch in the lending department, disappointed yesterday, even though it too reported stellar Q2 numbers on Friday.
At a time when the Dow Industrials have been moving to new record highs almost weekly, spurred by the manic performance of just one or two stocks on a given day (Merck was Monday’s excuse for a rally), the pronounced weakness of financial-sector bellwethers counts as just one divergence among too many. Advance/Declines and New Highs topped last winter, utilities peaked in June, and two-thirds of NYSE stocks are trading below their 50-day lines.
Quite similar statistics must surely have obtained during the summer of 1929.
***
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 © 2007, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Tuesday, 24 July 2007 | Digg This Article | Source: GoldSeek.com
