-- Posted Friday, 20 March 2009 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Friday, March 20, 2009
“Phenomenally accurate forecasts”
Today we feature the work of our good friend Chuck Cohen, who combines technical savvy and horse sense better than nearly anyone else we know. He thinks Citigroup's meteoric rise in recent days bears eerie similaritites to the stock's spectacular bear rally last October, when it rose from 12.85 to 23.50 in just two weeks. Then, as now, he recalls, the hubris was deafening Here's Chuck:
"Back in October 2008, the stock market had just completed a very sharp drop dragging the Dow down to just under 8000. A sharp relief bounce carried the averages up to about 9,300 by the end of the month. At that time, most of the commentators, who never saw the severity of the decline coming, proclaimed that the correction was over, the worst had been discounted in the financial area, and stocks were once again a strong buy. But as I have pointed out on many posts [at LeMetropole.com], there was something missing in this happy view. There was never any real pessimism displayed in the sentiment indicators and in the financial media. Those who never told their readers or listeners to be careful all the way down were still saying 'buy.' Their advice was to 'average down' and continue to buy stocks, for over time this strategy has always worked out.
"But as I looked over some of the financial charts, I was struck by one very disturbing chart: Citigroup. So I submitted my analysis to Bill [Murphy of LeMetropole] on October 31, having little inkling how far this key company would fall, and what it possibly meant. The article is repeated below to explain my reasons back then for being so bearish. This brings us to the current situation. This week an 800 point rally in the Dow has once again generated a huge amount of joy and confidence in the financial media and among many of the permabulls. The argument remains the same as it was five months ago: the worst has been discounted; and to hammer this home, one after another of the architects of the disaster are being quoted around the clock. The only people missing are Sir Alan Greenspan ("Don't blame me..."), Robert Rubin ("Don't blame me, either...") and Bernie Madoff ("I did it but I knew what I was doing.") If you think I am exaggerating, please click on Barrons.com and CNBC.com and read the headlines.
Where's the Fear?
"But, as I did back in October, I looked once again this weekend at the now lowly Citigroup's chart, and amazingly, noticed some eerie similarities to the Citigroup chart back in October. This is just a 10-day chart, but look at the spikes up on the openings even before Citigroup broke a buck , and more interestingly, note that it has gapped up 3 out of the past four days. Does that reflect fear or as we can see back in October, an impatience that rarely comes at a true bottom?
"This is my point. If the October situation brought the stock down over 95% in four months, what will this situation possibly mean? My guess is that this rally is destined to fail. It might be this week or perhaps after a test of the rally top, in three weeks. But a failure and a break of the bottom, especially considering the incredible bullishness in the VIX and in the put-call ratio, we will plunge into an unthinkable collapse and panic.
Gold at Unimaginable Levels
"I realize that outside of [LeMetropole], this is a totally radical, un-American view. But for those of you who have been longer-time subscribers, you certainly have been warned over and over of the end-game. We have been warned of a stock market collapse, a housing disaster and very possible social and economic chaos with the price of gold eventually going to unimaginable levels. The last two events have not yet come, but I believe they are very close.
"Only one generation was chosen to be the final one before the Lord's return, and I believe that it will be ours."
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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 Friday, 20 March 2009 | Digg This Article | Source: GoldSeek.com
