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-- Posted Thursday, 14 August 2008 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Thursday, August 14, 2008

“Phenomenally accurate forecasts” 

The stock market has come to be driven almost entirely by technical trading, so we shouldn’t be surprised to see that so obvious a trendline as the one shown in the chart below has ruled the action in recent weeks.  Between mid-July and early August, the E-Mini S&P has lit upon the support three times, attracting more and more technicians’ eyeballs with each successive bounce. By last Friday, it would appear, every one of them was waiting to pounce as the futures zig-zagged their way down from the previous day’s spike top. And that’s why the futures never got there. Instead, they exploded for huge gains spread over two days, stranding would-be buyers and making shorts wish they’d never been born. It happened again yesterday to a lesser degree when the E-Mini S&P plummeted to within 7 points of the trendline, but then reversed so sharply as to leave bidders choking on fumes.

So what might this portend for the near term? Our prediction is that, within the next 5-7 days, it’s going to end badly for bulls. We base our dour outlook on the E-Mini S&P’s failure to achieve a 1320.25 rally target at the top of last week’s diabolical short squeeze. The peak of the move was at 1313.50, but if bulls had really meant business they’d have gone the extra 100 yards to the target that day. If we’re right about this, then impending bounces from the trendline should grow successively weaker, turning a month-long channel formation of highs and lows into a bearish wedge. One of these times, the eager bidders who have staked out the trendline are going to get what they’ve been wishing for – in the face.  Until then, however, shorts will remain the best friends this market has, since they are the only buyers with the power to push the averages through resistance and cause pundits to believe that perhaps things are getting better. Eventually things will get better, of course, but even the unbought optimists seem to have given up hope that it will happen as early as 2009.

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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, 14 August 2008 | Digg This Article | Source: GoldSeek.com

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