-- Posted Wednesday, 10 October 2007 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Wednesday, October 10, 2007
“Phenomenally accurate forecasts”
Take it from a hard-core permabear: This market is going higher – possibly much higher. We edged our forecast for the Dow Industrials up to 15175 a while back, even as we were telling you that the real estate sector is about to become a Depressionary bog. Are these forecasts necessarily incompatible? Only if you are the sort who thinks logically, as opposed to imaginatively. Take our friend Joe D., who wrote to tell us yesterday that he was throwing in the towel on short positions in Yum Brands and MGM. From a logical standpoint his initial decision to short the shares of these companies seems flawless, even with both stocks currently in uptrends as steep as Yosemite’s El Capitan. Yum! Brands, chicken purveyor to the world through its KFC outlets, is a dead duck as long as the bird flu story continues to grow scarier by the day, which it must. And MGM is even deader meat, since the casino business is more bloated and competitive than ever as the U.S. economy dives headlong into recession-or-worse.
But why should such details matter if equally weighty realities have failed to slow the bullish onslaught of the Dow Industrials and Nasdaq 100? In fact, in a stock market that has turned logic and even rationality on its head, it is the very worst stocks that should be climbing the fastest. And they are, as witness the performance of that indomitable category killer in the auto business, Chrysler. Pondering these in-our-face affronts to reality, and with the urgent goal of removing ourselves from harm’s way, we die-hard bears must be open to the imaginative point of view – i.e., that with the Industrial Average appearing to consolidate at 14000, it’s quite plausible that – are you ready for this? – “We ain’t seen nuthin’ yet!”
So get over the notion that the stock market, dumb as a boiled cabbage, somehow looks ahead and sees a robust recovery in the housing sector six months out. It sees nothing other than its own navel, really, and that is all it will continue to see until the day stocks take such a hellish downturn that even Kudlow will run for cover. Of course, in the meantime it can’t hurt for us to monitor some of the telling signs of trouble, including the fact that neither the Transports, nor the Utilities, nor the Banks, are in gear with the Dow and Nasdaq. But just as we should not look to real-world economic events to guide us in our assessment of the market’s prospects, neither should we depend on bedrock principles of technical analysis to tell us when the insanity will end.
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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 © 2007, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Wednesday, 10 October 2007 | Digg This Article | Source: GoldSeek.com
