-- Posted Sunday, 8 June 2008 | Digg This Article
| Source: GoldSeek.com
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“Phenomenally accurate forecasts”
Clues abound that Friday’s selloff is unlikely to turn into an avalanche next week. In the first place, if investors had reacted rationally to the day’s horrific unemployment news and soaring oil quotes, the Dow might have fallen 800 points rather than a mere 400. The fact that bulls even attempted to rally stocks about two-thirds into the session attests that they still don’t get it. More than a few of them evidently believe the U.S. economy will experience either a shallow recession or none at all, and we should therefore look for them to turn up bargain hunting next week, preventing the rout that most bears are probably expecting.
We wouldn’t be surprised if by week's end the Dow Industrials had traded no lower than 12032, a Hidden Pivot support that lies just 160 points beneath Friday’s bottom. We plan on bidding cautiously there ourselves, using a tight stop-loss. We are no bulls, to put it mildly, and we’d be dumbfounded if the Dow has not shed a third or more of its value by year’s end. Panic selling will help get it there, and quickly once it begins, but investors do not yet appear to have reached that point.
Nor does one of the stocks we love to hate, Citigroup, seem quite ready to enter its death dive. Citi settled on Friday at 20.05, down nearly 5% along with quite a few other financial-sector biggies. Just a week ago, we sent out a series of bank-stock charts that showed why we think Citi is bound for at least $10.05. But for now, we’re advising subscribers to bid cautiously at a Hidden Pivot support that lies less than $1 beneath Friday’s low.
Apple Foie Gras
And then there’s Apple, which seems like it is being groomed by DaBoyz for a final distribution above $200 before They pull the plug. The stock poked briefly above that threshold in January before getting drubbed for a nearly $90 loss in the tidal wave that greeted the New Year. However, Apple has been deftly fattened and nurtured back to voluptuous ripeness since, and probably few would recall why the stock got sold down so hard to begin with. But we do, and we think bears were right to act as though the Cupertino firm’s red-hot sales might cool down if the U.S. economy went cold. For the record, Apple fell on Friday, but only about half as much as the Dow percentage-wise.
Bottom line: Investors’ moment of catharsis, to be brought on, perhaps, by the failure of a large U.S. bank, is not yet at hand. For that reason, if stocks should start the week by falling only moderately, we’ll be looking, not to bargain hunt, but to pick a presumably temporary bottom.
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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 Sunday, 8 June 2008 | Digg This Article | Source: GoldSeek.com
