-- Posted Tuesday, 22 April 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Tuesday, April 22, 2008
“Phenomenally accurate forecasts”
Bank of America got off pretty easy yesterday after posting a 77% drop in earnings. The stock fell just $1.06, suggesting that investors may have gotten used to big banks routinely announcing multibillion losses every quarter. In B of A’s case, the actual write-downs totaled nearly $8 billion, including $1.91 billion for losses from investment banking and another $6 billion from bad credit. Considering the foregoing, the Wall Street Journal’s market wrap-up was inscrutable: “Investors have excused financial firms for some poor earnings reports recently,” the Journal noted, “but they're not going easy on Bank of America.”
Maybe it’s a relative thing? After all, when Citi announced a $5.1 billion loss last week, the stock soared. Seen in that light, the two percent markdown of Bank of America shares yesterday might seem pretty harsh. To give B of A it’s due, it has taken a few months for big losses to surface, and although many banks have been drowning in red ink since the beginning of the year, B of A’s problems, whatever they might be, have barely attracted a dishonorable mention on any top ten lists of troubled banks that we’ve come across. Perhaps the spin doctors have been grooming it to take over Lehman Brothers if the need should arise? A dirty job, for sure, but someone’s got to appear qualified for the task.
Short Squeeze Next?
The Dow Industrials fared about the same – which is to say, no worse than prayerful bulls might have hoped. The blue chip average was down a hundred points in the early going, most of the slippage having occurred on the opening bar. But by day’s end the Indoos had recouped all but 24 points of the loss, and we’d be surprised if this show of resilience didn’t help propagate yet another headline short-squeeze by week’s end. If so, we have two rally targets in our sights for the Dow. Using the Mini-Dow futures contract, either or both of the targets can be shorted using stop-losses as tight as a few ticks. If the higher number is reached – and we are pretty confident that it will be – it would put the Industrial Average within less than eight percent of all-time highs. Who knows? Maybe if stocks really go bonkers, the nuttiness will spread into the housing sector?
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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 © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Tuesday, 22 April 2008 | Digg This Article | Source: GoldSeek.com
