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-- Posted Thursday, 5 March 2009 | Digg This Article | Source: GoldSeek.com
Rick’s Picks Thursday, March 5, 2009 “Phenomenally accurate forecasts” Has the stock market put in an important low? We doubt it, and we’ll tell you why in a minute. But we should acknowledge that some technicians we know are apparently impressed by the saucer bottom traced out by the Dow Industrials and other key indexes over the last three days. The pattern is shown in the chart below, and if one were a reader of tea leaves looking desperately for positive signs, this classic formation might do in a pinch. Even considered from a Hidden Pivot perspective – that’s the technical method we use – prospects don’t look all bad. Notice how yesterday’s high exceeded the tiny peak made on the way down Tuesday before buyers got cold feet. Subtle as the overshoot was, it’s an encouraging sign. This is notwithstanding the fact that the selloff that followed was nasty, wiping out 40% of yesterday’s 250-point gain in the final 25 minutes of the session. 
To understand why stocks behave the way they do, we prefer to ascribe human traits to their price movement. And why not, since the ups and downs of stocks and commodities are driven by alternating waves of very human fear and greed? In fact, no more perfect analog could be found for mob behavior than a stock chart. In this instance we see a rally that looked back on its own progress, saw the little peak from Tuesday sticking up, and conquered it before taking a rest. In our anthropomorphic way of looking at things, we would characterize yesterday’s rally as a real scrapper, ready to take on any challenge it encounters, big or small. The 6883 Factor So why are we still bearish? The answer comes down to a number: 6883, a Hidden Pivot support. Some of you may recall that we billboarded this target as our minimum downside objective in late January, when the Dow was still trading above 8000. On Monday, the Indoos smashed through it and kept going, reaching a low the next day of 6705. When supports as clearly defined as this one fails, especially so badly, it is usually a warning that the downtrend will continue to the next Hidden Pivot target. That number, for your information, is 5794, and we’ll be betting on it unless the blue chip average reverses with sufficient power to blow past 7971. That’s not impossible, but you’ll probably get better odds playing the Trifecta or a Big Six wheel. *** Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. 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 Thursday, 5 March 2009 | Digg This Article | Source: GoldSeek.com
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