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-- Posted Friday, 26 June 2009 | Digg This Article | | Source: GoldSeek.com
Rick’s Picks Friday, June 26, 2009 “Phenomenally accurate forecasts” The short-squeeze mania that sent stocks blithely higher yesterday reminded us that shares are likely to remain erratically buoyant at least until the end of the second quarter. “Rebalancing” has been the name of the game since the bear rally began in early March, and portfolio managers are unlikely to alter their allocation strategy with less than a week to go before they get their final “grades” for the quarter. Meanwhile, if there was any doubt about the aggressive institutional tilt toward shares during Q2, they were refuted by a friend of ours who recently moved his wealth management business from one brokerage house to another after being a star at the former for more than 30 years. 
Our friend has done extremely well for his clients over the long haul, mainly by being in and out of stocks at the right time. (For the record, he just bought U.S. zero-coupon STRIPS of 2037 for his own portfolio.) In recent months he had his clients more heavily in fixed-incomes than his employer would have preferred. They put the screws to him, insisting that he boost his clients’ portfolios to 75% equities, and that’s when he decided to bolt. One might have thought they’d cut him some slack, since he has consistently ranked among the very top brokers in the U.S. But the company’s “culture” has changed radically under new management, and many of his colleagues, including the top brass, have abandoned ship. We’d love to short the stock of this company, except that it is no longer publically traded, having been absorbed by a giant of the banking industry whose name will go unmentioned. Parabolic Spike Regarding the ongoing, though presumably doomed, resurgence of shares, it wouldn’t take much for DaBoyz to tighten their grip on the scrota of bears, sending stocks into a parabola to end the quarter. To accomplish this, for starters, we require that a “booster stage” rally exceed at least two prior peaks on the hourly chart. Yesterday’s surge, fierce though it may have seemed, did not surpass even a single such peak. However, as the chart above shows, it left the S&P futures in position to knock off both of the required peaks with a further thrust above yesterday’s highs of just 7.25 points. Shorts looking for respite in the form of a pullback may get just the opposite: a squeeze overnight that pushes the futures past one or even both of the peaks before Friday’s opening bell. If that should occur, prepare to be inundated over the weekend with headlines about how the stock market is leading the U.S. out of recession. Far more likely, in our opinion, is that the stock market is leading us to the edge of a towering cliff. *** Alleged Inflation vs. Deflation We’ve insisted all along that anyone taking the inflation side of the alleged inflation vs. deflation “debate” was unclear on the concept. The whack-jobs in the inflation camp seem to think its all about the money supply, but we suggest using a much simpler metric, to wit: As long as the real burden of debt, both private and public, is increasing, deflation rules. But if you need more proof that inflation is just a hallucination at the moment, here’s a link to a guy who gets it – Dr. Housing Bubble. *** 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, 26 June 2009 | Digg This Article | Source: GoldSeek.com
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