-- Posted Friday, 1 May 2009 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Friday, May 1, 2009

“Phenomenally accurate forecasts”

Our 129.65 target caught the spike top in Goldman yesterday within two cents, but it remains to be seen whether that will be it for the stock’s sensational bear-market run. That’s a crucial concern for investors, since, if Goldman shares have completed their death rattle, then so has the mania that has driven the broad averages higher since early March. Some readers may recall that the stock market’s bear squeeze began with an announcement of bogus earnings by Citigroup at that time.  All of the big banks have followed suit with their own dubious boasts of profits, including a $4.6 billion gain booked subsequently by Citi’s trading desk in the most recent quarter. Our friend Dan Denning explained how those profits came  mostly from bets the bank had made against itself in the default insurance market.

Goldman’s trading desk racked up even bigger profits during the same period, but the question no one seems to be asking is, so what?  Trading profits, even when they amount to billions of dollars per quarter, will hardly sustain banking giants that in their heyday were making many billions more through a wide variety of operations that no longer exist. Leverage was the name of the game, but leverage may be dead for the next fifty years. Under the circumstances, Goldman and every other multinational bank can pursue just one strategy in the years ahead: shrink to survive. That’s why we’re sticking with our forecast that Goldman shares eventually will trade below $30.

$144 Level Crucial

But what about now?  Is the stock about to enter a death dive after nearly tripling in price since November, when it bottomed at 47.41?  Bearish as we are on GS shares for the long-term, we think the final blowoff lies ahead. That is notwithstanding the sharp sell-off that occurred yesterday from within two cents of an important Hidden Pivot target at 129.65. If and when the stock closes above that number, we’ll be looking for a last-gasp rally to around $144. If it should go just a little higher, though, surpassing a key peak at 144.98 recorded last September, all bets would be off, since that would turn the daily chart almost invincibly bullish. Indeed, we’d have to turn bullish ourselves -- for as long as we could stand it --  even with the economy mired in a credit deflation that has no conceivable outcome other than complete economic collapse.

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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, 1 May 2009 | Digg This Article | Source: GoldSeek.com

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