-- Posted Friday, 2 October 2009 | Digg This Article | | Source: GoldSeek.com

Rick’s Picks

Friday, October 2, 2009

“Phenomenally accurate forecasts”

Clueless commentators attributed yesterday’s stock-market selloff to weak manufacturing data and supposed fears over job numbers due out Friday. What poppycock! The pundits would have gotten closer to the truth if they had cited sunspots or unusual seismic activity at Yellowstone. Shares plummeted for the simple reason that they were ready to plummet. Think back to March, when this bear rally began. Since then, when have traders evinced even a twinge of fear over economic data?  In fact, they have ignored a steady stream of appalling economic news in order to obsess over a statistical recovery so ephemeral that it barely qualifies as a mirage.

What has “recovered,” mainly, is the stock market, which is in the throes of one of the most powerful bear rallies since the Great Depression. Some other green shoots sprung entirely from the imagination:  a blip in retail sales attributable to the cash-for-clunkers giveaway; a blip in consumer spending – again, credit the clunkers; a blip in home sales that reflects the success of auctioneers, not Realtors; and a blip in home prices that is more dead-cat bounce than prayed-for inflation.

Concerning yesterday’s broad plunge in the averages, it doesn’t take a rocket scientist to discern its cause. Just look at the chart above. The quote from our friend Garrett Jones, Bay Area forecaster, says it all:  The rally from the March lows has been so extreme that it was bound to correct when it reached the upper threshold of its price channel.  This is what we meant when we said stocks plummeted simply because it was time for them to plummet.  The mood of investors has changed, and with it perceptions of the news. For the last seven months, as far as Wall Street was concerned, all news was good news.  Now, no news will be good news.  It is hubris itself that is about to slip back into a bear market. 

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not b 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, 2 October 2009 | Digg This Article | Source: GoldSeek.com

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