Thursday, November 13, 2008

‘Rescue’ Is Now Out of Control

By: Rick Ackerman – Posted in: Current Touts

At the rate Goldman Sachs shares have been falling lately, they could reach our $29 “hula target” by Thanksgiving. Barely a week ago, we predicted a plunge to $29 when GS was trading above $90; yesterday the stock hit $64. At the time, we vowed that if the forecast did not pan out, we’d don a grass skirt and dance the hula in Times Square in the middle of Feburary. So far, and unfortunately for Goldman’s shareholders and partners, we haven’t had much cause for worry. The $29 projection was purely technical, based on Hidden Pivot analysis. But you don’t have to be a chartist to see that Goldman’s survival issues will only grow more challenging. If you merely ponder what the firm was doing to make profits by the tankerful a year ago, you’d have to wonder how they will make their money now; for the firm was operating at the very center of a smoke-and-mirrors business that no longer exists. We don’t doubt Goldman can survive and make a profit. However, in the deleveraged financial environment that now exists, and which will probably continue to exist for at least a generation, we’d be surprised if they can make even a hundredth of what they made in their halycon days as a global wheeler-dealer. Meanwhile, there can be little doubt that Paulson’s latest ditherings contributed to the whack that financial stocks took yesterday. We should come right out and say it, since the mainstream media probably will not: Paulson, Bernanke and Friends have lost control. Yes, they have. As much should have been obvious to anyone tuned to Paulson’s speech yesterday. Turns out he’s no longer keen on buying up bad mortgages; instead, he now wants to pump credit money into the consumer economy. Just what we need: more

E-Mini S&P (848.75)

By: Rick Ackerman – Posted in: Current Touts Free Rick's Picks

I promoted a 766.50 target here yesterday, but let's stop pussyfooting and think the unthinkable, which would mean 612.75. The target comes from the hourly chart, and it implies that a hellacious plunge much like the one that occurred between mid-September and mid-October could happen again. This would be very unusual, since extremely steep impulse legs usually require a lengthy consolidation/distribution before producing a follow-through leg. However, because this market seems well capable of extreme and even unprecedented behavior, I am giving more weight to the possibility of a 230-point collapse straightaway. I should therefore note that the midpoint support associated with 612.75 is 839.75, a Hidden Pivot that lies just 1.50 points beneath yesterday's bottom. If it were to be breached on a closing basis for two consecutive days, I'd suggest preparing for a possible freefall to 612.75. That would be equivalent to an approximately 2000-point plunge in the Dow, and so some regulatory circuit breakers would probably arrest the fall at various points along the way.

December Gold (713.40)

By: Rick Ackerman – Posted in: Current Touts Free Rick's Picks

Let's not beat our heads against the wall trying to bottom-fish pivots all the way down to $628. For Gold to signal a meaningful turn, we should require no less of it than a print at 782.30, a tick above a minor peak along the wall of October's steepest downward pitch. (See chart) It is not important how long it takes for the futures to accomplish this; the key is that the small segment of the rally from peak #1 to peak #2 be unbroken on the 60-minute chart. If you're looking for a hair-trigger signal for today, use 718.20, whose significance can be discerned only on the 1-minute chart.

C Citigroup (9.74)

By: Rick Ackerman – Posted in: Current Touts Free Rick's Picks

Citi is all but guaranteed to hit 7.75 (or 7.09 if any lower), and soon, but as we have learned over and over again in this stock, that doesn't necessarily mean we can make money shorting it. I have no strategy to suggest for the opening, since opening-rotation prices rarely favor the retail customer. However, if Citi begins the day with a moderate rally, you might want to have a stink bid in for some December 12.50 puts (CXZ)._______ UPDATE: Citi did open higher -- on a 25-cent short-squeeze gap to 9.90 deftly orchestrated by the world-class sleazeballs who manipulate this stock for a living. The rally then collapsed 15% to a so-far low of 8.51. If you shorted the opening as suggested, cover half at these levels and use a stop-loss at 8.68 for the rest.