-- Posted Thursday, 4 August 2011 | | Disqus

Rick’s Picks

Thursday, August 4, 2011

“Phenomenally accurate forecasts”

Pity the Wall Street Journal for having to gin up an explanation each day for whatever it is that the stock market did the previous day. We reflected on the difficulty of this task, and its inherent futility (and silliness), while discarding a stack of old newspapers yesterday morning. Markets Show Relief, for Now was the above-the-fold headline that greeted subscribers on Monday’s Money and Investing page.  And just how had this show of relief manifested itself? In fact, the steep fall of the broad averages had moderated somewhat on Friday, allowing the Dow Industrials to close down less than a hundred points. Moreover, on Sunday night there was evidence of a strong rally globally ahead of the powerful surge that was to occur in U.S. markets the following morning. Sunday night’s news had concerned the debt-limit deal just approved by the House of Representatives.

We had anticipated the stock market’s rally on the news, but also the rally’s immediate failure, in the following trading alert disseminated to subscribers Sunday night. It was headlined, “Watch for a Bull Trap”:  “If a political deal is barfed up before Monday’s night’s supposed deadline, stocks will have nowhere to go but up.  This will not be because traders think the deal is bullish for the market or the economy, but because they expect other traders to react as though it were.  Since nothing could be further from the truth, we should expect the rally to be over rather quickly.  My hunch is that it would be a good short sale with the Dow up between 100-120 points…”

And so it went.  Any bull who bought Monday’s opening bar was quickly trapped by a hellacious selloff that was still in progress as we went to press Wednesday afternoon.  The Wall Street Journal was of course a step behind the fact with what may or may not turn out to be the silliest headline of the week:  Economic Fears Hit Global Markets.  Fancy that. In other words, the supposedly all-seeing, all-knowing, omniprescient stock market was making one of its increasingly frequent “adjustments” to facts that have held most of us in dread for nearly four years. To say that these fears somehow took Wall Street’s best and brightest by surprise is to suggest that DaBoyz are more clueless than any sentient reader might have inferred. Lest any of our own readers be shrouded by the fog of the Mainstream Media’s coverage of the financial markets and global economy, we’ll state for the record that the technical evidence is overwhelming that the Mother of All Bear Rallies begun in March of 2009 is over.  If you’re interested in the precise reason why, and if you don’t want to be fooled when the bear occasionally rallies with a vengeance, as it inevitably will,  consider taking a free trial subscription to Rick’s Picks by clicking here.  

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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 be construed as an indication of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts.  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 © 2011, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Thursday, 4 August 2011 | Digg This Article | Source: GoldSeek.com

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