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-- Posted Friday, 2 November 2007 | Digg This Article | Source: GoldSeek.com
Rick’s Picks Friday, November 2, 2007 “Phenomenally accurate forecasts” Reality won a rare round on U.S. stock exchanges yesterday, but permabears should ponder the chart below before whooping it up too deliriously. Notice that on a day in which the Dow Industrials fell by a whopping 362 points, the QQQs were down less than a point, settling a hair lower than Wednesday’s bottom. In order to generate a true distress signal, creating a bearish impulse leg of daily-chart degree, the QQQs would need to plummet beneath 51.33 by Monday!
Of course, more-dramatic things have happened on the nation’s bourses (even if you’d have to be an old-timer to remember when), and a decline of that magnitude could occur at any time. Today, even. There’s also the chance that over time the S&P Index and the Dow Industrials will drag the tech-heavy Nasdaq indices lower instead of Google, Apple and Research in Motion dragging the entire universe of U.S. stocks higher, as they have been. But as long as those three stocks have the potential to delude Kudlow and the imbeciles who heed him into thinking three tech stocks will somehow get us through a 1930s-style real estate crash, we need to carefully manage the risk of our short positions, choosing the right vehicles and taking partial profits at every decent opportunity.
A logical first step will be to favor the Diamonds over the QQQs henceforth as our bearish vehicle-of-choice. For if we are to truly enjoy days like yesterday, and to gloat over the money we have made when most investors were getting creamed, we might as well pick the index that will give us the best ride for our buck. Unfortunately, we held stolid November 54 puts on the QQQs at yesterday’s opening, and although they had increased in value by two-thirds by day’s end, we’d have gotten more mileage if we’d held at-the-money Diamond puts instead. The equivalent November 139 DIA puts more than doubled in price, going from 1.75 to 4.00 overnight. We’re not complaining, mind you, but holding puts in the Diamonds would have made for a more profitable day – and an easier one, too, since the Diamonds’ countertrend rallies were never so menacing as those mounted by the QQQs.
Kudlow Watch!
Incidentally, if I have maligned Kudlow unfairly, I’d appreciate hearing about it. I haven’t actually listened to anything he has said in years, but I have trouble believing that his presence on CNBC would have grown as it has if he were not talking the kind of happy horses**t that CNBC viewers eat up. Apparently, Kudlow has replaced the self-aggrandizing thimble-riggers who made their living shilling tech stocks during the dot-com boom. That is no way to make a living these days, since, once you’ve bloviated about Apple, Research in Motion and Google, there’s not a whole lot more you can say about the alleged “bull” market. Anyway, if you want to participate in an ad hoc Kudlow Watch, click here and drop me an e-mail any time with your observations and selected quotes.
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SEMINAR SOLD OUT, BUT…
Seats for this weekend’s online Hidden Pivot seminar are sold out, but if you are interested in attending the class at a later date, click here and I’ll let you know when the next session is scheduled -- probably in December or January. If you would prefer to attend an on-site class, possible venues in 2008 include Vancouver, Boca Raton and San Francisco. Please let me know if you’d be likely to come to the seminar if it were held in one of those cities. ### 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 Friday, 2 November 2007 | Digg This Article | Source: GoldSeek.com
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