-- Posted Wednesday, 15 April 2009 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Wednesday, April 15, 2009
“Phenomenally accurate forecasts”
No sooner do we crown Goldman Sachs our Bear Rally King than…THWUMP!...the stock gets socked with a $15 loss, its worst day in recent memory. There were some lurid stories on the Web to help turn yesterday’s selloff into a gang-bang, including one at SeekingAlpha.com that wondered aloud whether Goldman deserved to share in AIG’s bailout booty if, as is rumored, Goldman made a ton of money shorting AIG stock before the insurance firm collapsed.
While Goldman reported better-than-expected earnings of $1.8 billion for the first quarter, much of it attributed to trading in fixed-incomes, the firm threw cold water on revelers yesterday by calling the strong numbers unsustainable. A concurring opinion from Standard & Poor’s, whose guesswork in recent years has made the CIA look positively oracular in comparison, helped ratchet up the selling when the ratings firm wrote: “Coupled with persistent weak economic conditions and capital markets turmoil, we believe it would be premature to conclude that a sustained turnaround” in Goldman’s performance is under way.
Insanity Does a ‘180’
Funny how investors couldn’t get enough Goldman stock just a day earlier. They goosed it up $7 in just a few hours, capping a $30 surge that had begun from $100 a week earlier. After Monday’s close we were expecting the stock to go even higher in the days ahead, to at least $143. Now, even under the best of circumstances, it’s going to take longer than we might have predicted.
So what might that portend for the broad averages? We think it will slow their ascent, although we doubt that the bear rally that has pushed the Dow up by more than 1,600 points since early March is ready to die. More likely is that stocks will recoup yesterday’s moderate losses by week’s end or earlier and then head higher, albeit at a sluggish pace until Goldman get back in gear. If we are wrong and the five-week-old short squeeze has indeed run its course, it will be signaled definitively by the breach of a key support in the Dow at 7437, nearly 500 points below yesterday’s settlement price. A far more subtle signal could come as early as Tuesday night with the penetration of a Hidden Pivot support at 832.50 in the E-Mini S&P. As of 5 p.m. EDT, the low was 834.25.
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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 Wednesday, 15 April 2009 | Digg This Article | Source: GoldSeek.com
