-- Posted Thursday, 5 June 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Thursday, June 5, 2008
“Phenomenally accurate forecasts”
The 12032 target shown in the Dow chart below is what Rick’s Picks calls a “hula number.” So confident are we that this Hidden Pivot support will be reached, and soon, that if it is not, we’ll don a grass skirt and dance the hula in Times Square in the middle of February. The target implies a 360-point drop from current levels, and although that might not sound like anything to cheer about, it could prove to be just a small downpayment on what comes next. For beneath it is only one further support we consider worth noting, a Hidden Pivot at 11208 that lies a whopping 824 points lower. Optimists that we are, we’ll probably try bottom-fishing if and when the blue chip average gets there, since we expect a tradable bounce. However, if the Dow should settle below 12032, or trade more than 15 points beneath it intraday, we’d likely exit the position and saunter toward the fire escape.
In our daily forecasts we try to keep technical analysis separate from real-world concerns, since no manifestation of rational human behavior could be farther from observable reality than the stock market. But if we were looking for evidence to support a bearish outlook, we would cite the recent disjunction between the price of oil and the performance of the broad averages. Stocks obviously came under pressure as crude quotes made their way toward recent, record highs near $135. But now that oil’s world-impaling spike has begun to recede, touching a low yesterday of 121.84, the stock market has yet to breathe the ostentatious sigh of relief we might have expected. Where, we might ask, is the celebratory short-squeeze rally? Could something else be troubling Wall Street?
Glue-Horses
A possible answer to that question surfaced yesterday in the form of a Moody’s downgrade of bond insurers MBIA and Ambac. Recall that the spinmeisters moved heaven and earth a few months ago to maintain the charade that these glue-horses both deserved triple-A credit ratings; for if not, how could we rate the debt of all the companies whose liabilities are insured by them? Yesterday, weighed against the ostensibly beneficial slide in oil prices, and against economic data that some observers cited as evidence of an economic turnaround, Moody’s turd-in-the-punchbowl gave would-be share buyers second thoughts. The result was that a 100-point rally in the Dow melted away as quickly as it had appeared.
This underscores a point we made here the other day, that bad news is no longer being perceived by investors as good news. If so, the re-emergence of problems in the banking system that got papered over a couple of months ago are bound to unsettle more than a few on Wall Street who still insist that the worst is past.
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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 Thursday, 5 June 2008 | Digg This Article | Source: GoldSeek.com
