-- Posted Friday, 19 September 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Friday, September 19, 2008
“Phenomenally accurate forecasts”
The Dow Industrials rallied 614 points from their lows yesterday. Do we risk your scorn, gentle reader, by characterizing the move as unimpressive? Let us explain. Notice in the chart below that, at the very height of yesterday’s hysterical short squeeze, the Dow Industrials failed to take out Tuesday’s imposing peak. Why should that matter? In two words: impulse legs. Impulse legs are at the heart of Hidden Pivot analysis, and by applying just a couple of simple rules, we know how to spot a fake. By our criteria, yesterday’s breathtaking thrust, powerful though it may have seemed, was a blatant phony, presumably incapable of surviving for more than another day or two. The rip-roaring rally in fact masked a yellow streak as telling as the Cowardly Lion’s swishy tail.
We hesitate to ascribe animal behavior to something so coldly indifferent to humanity as a stock average, but we do so anyway, since employing this perspective has always helped us to understand why stocks do such crazy things. By our lights, rallies that have real guts almost invariably tend to surpass any obvious peaks to the left of them. This one did not, and we can only infer that it chickened out when it “looked” to the left and saw real resistance in the form of a daunting prior high.
Clown Alley
Commentators attributed the market’s wildly bullish behavior to several factors, all of them manifestly too idiotic to discuss. One was that the Government was thinking about creating an agency similar to the Resolution Trust Corp to help dispose of distressed assets. It was one thing, in the early 1990s, to invite the pishers in to buy golf courses, Impressionist paintings and other such bric-a-brac. But we wonder who Uncle Sam has in mind to buy America’s airlines, auto manufacturers and banks? Middle East oil producers are the only guys around with that kind of money, but why would they want to take a major stake in America’s biggest failed industries? Not that we would ever let them “own” us.
Yesterday’s biggest guffaw came with the announcement that New York Attorney General Andrew Cuomo had started a “wide-ranging investigation” into short selling. Is this guy trying to upstage Al Sharpton as New York’s biggest buffoon, or what? He seems to have torn a page from the politician’s’ 1929 playbook, which blamed “bear raiders” for just about every problem except leprosy. Wait till Washington politicians take up this theme. Heads will roll. Bonuses will be denied. Wall Street’s greed will be laid bare. And the Republic will of course be saved.
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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 Friday, 19 September 2008 | Digg This Article | Source: GoldSeek.com
