Should investors hail President-elect Obama’s plan to create 2.5 million jobs as good news? Frankly, no. It is probably the worst news to hit Wall Street since 1935, when FDR created the Works Progress Administration with the stroke of a pen. Obama apparently intends to bring back Keynesian quackery full-bore, and with it a robust echo of Santayana’s warning: Those who cannot learn from history are doomed to repeat it. We shudder to imagine how long WPA II will delay a genuine recovery -- one based, perforce, on strong capital investment, technological innovation, lower taxes and -- let’s not mince words here �' creative destruction. It took a World War to lift the U.S. economy from the 1930s Depression, but we’d prefer not to imagine what it might take to get us out of this one, especially if nanny state welfarism becomes the central theme of the Obama Administration, as appears likely. That said, we don’t see any good alternatives, politically speaking. Nor do we think the sort of capitalism that has brought the world economy to the edge of disaster deserves a second chance. With America slipping into economic depression, we’d sooner take our chances with home-grown socialism, at least for a while, than with the kind of economic policies that lobbyists for the banks, manufacturers and big business would clamor to implement under duress. All have been corrupted beyond redemption anyway, so let them sink or swim. We will all have to endure quite a bit of economic pain before common sense is restored to the marketplace and the wisdom of Adam Smith once again holds sway in the nation’s business schools. A generation could pass before we are able to start up the banking business anew, presumably after driving a stake through the heart of the Federal
Tuesday, December 9, 2008
Dollar Index (85.92)
– Posted in: Current Touts Free Rick's PicksI'd said a two-day close under 85.82 would turn the daily chart bearish, but we'll give the Dollar Index the bullish benefit of the doubt for now, since it has climbed during the night session from a low just beneath our threshold to a high just above it. We can wax bearish at such time as the 85.82 pivot appears to have become resistance; for now, it still looks like support. If and when this midpoint is decisively breached, it would portend more downside to at least 83.95.
January Crude (43.85)
– Posted in: Current Touts Free Rick's PicksShort-term upside potential is to 46.75, assuming the futures get past the pivot's midpoint sibling at 44.65. However, it would take a thrust exceeding 47.27 to turn the hourly chart unambiguously bullish.
February Gold (772.80)
– Posted in: Current Touts Free Rick's PicksWe'll stick with the 808.70 benchmark given here yesterday to signal a decisively bullish turn on the hourly chart. A two-day close above it would suggest more strength is imminent, to as high as 876.20. Alternatively, if sellers gain the upper hand today, the first place where we might look for a bounce is at 753.10, the midpoint support of the pattern shown in the accompanying chart.
March Silver (10.015)
– Posted in: Current Touts Free Rick's PicksMy immediate upside target at 11.005 still looks compelling even though the pullback has gone further than anticipated. Ideally, the retracement should have stopped around 10.070, the midpoint pivot associated with 11.005. However, we can infer that the projected follow-through rally is under way if the futures close above 10.070.
IBM (84.76)
– Posted in: Current Touts Free Rick's PicksWe're offering a December 90 call short for 1.80 against a January 90 call acquired earlier for 2.34. My rally target for IBM over the near term is 88.21, at which point the December 90 call could be trading for as much as 2.10. Keep your bulletin launcher switched on today, since I may advise switching to shorting a December 85 call if it looks like it could pop above $5. The stock seemed tired at the close, but it's conceivable that it might pop for another $1.50-$2 before taking a well-earned rest.
