-- Posted Wednesday, 24 August 2011 | | Disqus

Rick’s Picks

Wednesday, August 24, 2011

“Phenomenally accurate forecasts”

Now that was impressive! An earthquake, of all things, shakes the Big Apple yesterday as it hasn’t been shaken since 9/11, and Wall Street never even breaks stride. Early reports suggested that some denizens of the Bowery were fearful the city might be under attack again.  They likely breathed a sigh or relief, however, when it became clear that the tremor was “only” a magnitude 5.8 earthquake, not a suitcase nuke. Before the quake hit shortly after 2 p.m. near Richmond, VA, a strong rally was already in progress from the night before, propelled by who-knows-what.  The temblor rattled big cities along the Middle Atlantic Seaboard, pushing Hurricane Irene off the front page even as the mounting storm, with sustained winds above 90 mph, threatened to wreak havoc on the East Coast this weekend. Traders were unfazed by it all, however, and by day’s end the buying spree had become a runaway freight train, sending the Dow up 322 points. The buying steepened in the final hour, sellers evidently having realized that resistance was futile.   

At the same time, Gold and Silver were getting pummeled, as so often occurs when the stock market pretends for a few delusional hours that all is right with the world.  December Gold came off its overnight high by $93, hitting a low of $1819 in the late afternoon, while September Silver was off a whopping $2.78, or a little more than six percent.  We look forward to a resumption of the buying in bullion shortly, and to the resumption of the stock market’s right-as-rain decline, as the Great Recession tightens its grip. Even so, we are forced to acknowledge that there is nothing in the technical picture that would preclude a very strong bounce here – conceivably, even, to new highs. We said as much in a Hidden Pivot analysis of the Dow Industrials disseminated to subscribers on Monday:  “The summer’s powerful selloff is still merely corrective on the monthly chart.  I mention this not because I think the market is likely to come roaring back to new highs, but to remind you that we must always interpret the signs disinterestedly.  If we do so here, it forces us to acknowledge that the second phase of the Mother of All Markets, begun a little more than a year ago, exceeded the required “internal” and “external” peaks to create a bullish A-B leg of monthly-chart degree. Although it has recently given way to a less powerful bearish one suggestive of a ‘duel,’ this dynamic, strictly speaking, implies that the bulls still hold a slight edge.” 

Heavy Insider Buying

Cutting to the chase, the charts could be interpreted as saying the so-far 2147-point selloff in the Dow Industrials since July 21 is just a normal, healthy correction in a still-viable bull market. We should note as well that our astute colleague Steven Jon Kaplan, The True Contrarian, has been acquiring stocks aggressively of late, in part because of insider buying that he says has reached “incredible extremes.”  It sounds surreal to us that stocks would be embarking on a major bull leg just as the economy is beginning to weaken noticeably.  Stranger things have happened, though, especially in the lunatic world of stocks and bonds, and so we can only resolve to be more diligent than ever in reading the signs with cold objectivity.  If you want to closely follow our analysis, which is updated round-the-clock, consider taking a free trial subscription  to Rick’s Picks. It will give you access not only to timely analysis and detailed trading recommendations, but to a 24/7 chat room that draws savvy traders from around the world.   

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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 Wednesday, 24 August 2011 | Digg This Article | Source: GoldSeek.com

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