-- Posted Monday, 5 January 2009 | Digg This Article | Source: GoldSeek.com

Rick's Picks

Monday, January 5, 2009

"Phenomenally accurate forecasts"

Because powerful rallies often look like fakes initially, we shouldn't be too quick to diss last week's vaporous surge, which sent the Dow wafting 700 points higher in the space of just four days. Another 100 or so points of such hot-air magic on Monday and bears could find themselves seriously on the ropes. The chart below shows why. Notice how Friday's 258-point thrust goosed the Industrial Average past two prior peaks. That's not very impressive by itself, because these were weak "internal" peaks created by the uptrend begun on November 21.

But if you look to the left of them you'll see a third peak that was made when the Dow was falling hard. This is a more daunting "external" peak, and if the blue chip average were to push above it Monday or Tuesday without taking a breather, it would generate a powerfully bullish impulse leg on the daily chart. The peak lies just 95 points above Friday's high, so it wouldn't take much more silliness to get past it. Skeptical as we might be about the staying power of such a rally, we'd resist the urge to short it until we see how it fares at 9256, a "Hidden Pivot" resistance. If that number gives way easily, though, and the Dow closes above it for two consecutive days, bears had better run for cover.

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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 © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Monday, 5 January 2009 | Digg This Article | Source: GoldSeek.com

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