-- Posted Tuesday, 9 June 2009 | Digg This Article
| | Source: GoldSeek.com
Rick’s Picks
Tuesday, June 9, 2009
“Phenomenally accurate forecasts”
The dollar extended its winning streak yesterday, rallying overnight to narrowly exceed the bullish benchmark we’d set for it just a day earlier. If the dollar is indeed reversing direction after three months of steady weakness, it could darken the economic picture. The reason is that it would put pressure on all who owe dollars, intensifying the effects of a global debt deflation that has been tightening its grip for nearly two years.
The greenback’s rally is just four days old and therefore still fragile, but there are signs that there is yet more buying power percolating beneath the surface. Notice in the chart above how Monday’s rally exceeded the three labeled peaks. The first of those peaks was nothing to get excited about; however, the breach of #2 and #3 was more impressive, since those were more daunting “external” peaks made on the way down. By popping through all three of those highs yesterday without pausing for breath, the Dollar Index created a short but powerful “impulse leg” on the hourly chart. Such rallies usual presage follow-through thrusts of equal magnitude, which in this case would suffice to generate yet another impulse leg, renewing the bullish trend.
Missed Top by a Penny
Another market-related event that hints of a possible tone change is the recent weakness in the shares of Goldman Sachs, which we have viewed as a stock-market bellwether in recent months. More recently, we were looking Goldman to peak at exactly 151.24, a Hidden Pivot resistance. On Friday, after surging $10 in just two days, the stock apexed a penny above our number, at 151.25, then retreated to a low of 146.19 yesterday. We covered 300 shares of a 400-share short position from 151.24 and are holding the last hundred shares for a possible home run.
Is Goldman’s spectacular run-up from a $47 low in November over? It’s impossible to say for sure, but if the stock continues to fall, it is all but certain the broad averages will fall along with it. Goldman’s joy ride has been fueled by delusions that the financial sector’s worst-ever crisis is over. We very strongly doubt this, notwithstanding the banks stocks’ powerful rally. If we are wrong, however, and Goldman shares are about to take another leg up, the next important Hidden Pivot above these levels is 171.87. That’s nearly 16% above yesterday’s settlement price, and it would become our minimum upside objective if the stock should close for two consecutive days above 153.50, a lesser hidden resistance that we’ll be looking to short as we did 151.24.
***
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 Tuesday, 9 June 2009 | Digg This Article | Source: GoldSeek.com
