-- Posted Tuesday, 13 November 2007 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Tuesday, November 13, 2007
“Phenomenally accurate forecasts”
The dollar’s feeble bounce yesterday seemed to be all that was keeping the stock market from falling apart. Even so, the Dow Industrials still managed to reverse a 120-point gain and finish down 55 points on the day. Tech stocks continued to tumble, creating a powerful drag on the averages. And Gold, in the throes of a so-far three-day sell-off, suffered its worst single-session drubbing we can recall when the Comex December contract fell by nearly $40. Fortunately, we had issued a bearish warning last week when Gold futures popped into a Hidden Pivot “red alert” zone between $846 and $852. A correction looked like a good bet at the time, but it was not possible to predict just how far the pullback might go.
That is far more easily done intraday, and so those who spent time in the Rick’s Picks chat room yesterday got to reap the benefit of real-time insights and analysis. As it happened, bullion’s ugly relapse late in the session was telegraphed by an earlier breach of a Hidden Pivot support just above $800. The chart above, which we published yesterday afternoon in the Intraday Notes section, tells the story.
By early Monday evening, further weakness had brought the December contract down to as low as 792.80. However, our analysis suggests that still lower prices are likely overnight. For the precise target, a Hidden Pivot support that you could bottom-fish with a very tight stop-loss, see the Touts section of Tuesday’s edition.
GOOG Out-Bears Us
From a technical perspective, there were no big surprises yesterday – other, perhaps, than that some former market leaders were even weaker than had been predicted. In Google, for one, we’d called for a 25-point drop, to exactly 639.27, if the stock breached a Hidden Pivot support at 660.57. This it easily did on the opening bar before plummeting the remaining $20 to within 16 cents of our target. The rally from that target was the best of the day, producing a $13 gain for anyone who bought at the advertised number. Indeed, the bounce looked strong enough to have us believing for a short while that the direction would be up for the remainder of the day. But we were soon proven wrong when Google turned south from $652 and plunged anew to an intraday low at $626.
In AAPL, we made pocket change trading from the long side as the stock plummeted. We accomplished this unlikely feat by buying a December 160 call option for 9.75 and selling it shortly afterward for $10. Although the trade was not explicitly recommended in yesterday’s Tout for Apple shares, we executed it nonetheless for the benefit of those who were watching to see what would happen when the stock hit our downside target at 156.59. We caught a nice bounce from near there, but it was short-lived.
Short and Relaxed
Our general feeling is that it is possible to go home short these days without losing any sleep. After all, the only conceivable buyers for stocks at the moment are shorts who have been goaded into covering. It’s hard not to notice that they haven’t been showing much fear lately, especially in the closing hour when they are most vulnerable. This is not to say the bears have grown complacent, only that they know a good bet when they see one. The risk is that the central banks will collude to goose the dollar one afternoon, instantly turning whatever has been making money for us in recent weeks into a loser. If so, we expect that any setback would be temporary, since there are so many disasters yet to play out in the financial sector. For an eye-opening read that explains why this is so, click on the link posted Monday evening in the chat room. As you will see, the banks have not even begun to tally up their true losses.
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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 Tuesday, 13 November 2007 | Digg This Article | Source: GoldSeek.com
