-- Posted Thursday, 26 March 2009 | Digg This Article
| Source: GoldSeek.com
There will always be days on Wall Street like yesterday, when even those who are barely aware of the stockmarket can understand that its activities are driven mainly by a bunch of yo-yos. To look at the dignified, neoclassical façade of the New York Stock Exchange, one would never guess that it is just a highfalutin’ nut-house. Take yesterday, for instance. The Dow Industrials began the day with an orderly 215-point rally, extending the bull run of the last few weeks. But luncheon remarks by our new Treasury secretary caused shares to swoon so precipitously that you might have thought the U.S. was under attack by the Martians.
In fact, Geithner had merely addressed China’s call for a new international reserve currency to replace the dollar. He noted -- quite innocently, if innocence is still possible in a public forum -- that the U.S. was “quite open” to any plan that would increase the use of IMF special drawing rights. No sooner had he finished the sentence than the dollar began to dive, causing the Dow to plummet 300 points in a trice. But minutes later in his speech before the Foreign relations Council, Geithner qualified the remark by saying he anticipated no significant change in the dollar’s international role. Bulls immediately seized on this clarification, driving stocks and the dollar into yet another hysterical short-covering rally that recouped most of the dollar’s losses and left the Dow up 90 points on the day.
7-Minute ‘Investment’ Horizon
So much for the staid world of investments. We wonder whether the term “investor” itself might be headed toward obsolescence, since no one who trades stocks any more seems to be looking ahead more than about seven minutes. Regardless, we remain bullish for no good reason – or rather, for purely technical reasons that were outlined in yesterday’s commentary, “Why the Bull Rampage Isn’t Over”. The price action in Goldman Sachs alone is persuasive enough to make the case, and it became even moreso yesterday when the banking Lothario’s shares lagged the market most of the day, only to take the Geithner short-squeeze and run with it, spiking $8 off the lows. This will likely prove painful for bears, who would have grown complacent yesterday when Goldman stock couldn’t seem to rally even when the broad averages were moving higher. With Goldman shorts once again on the ropes, look for the stock to reclaim its leadership role in this bear rally.
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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 Thursday, 26 March 2009 | Digg This Article | Source: GoldSeek.com
