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A Hula Dance in Our Future?

By Rick Ackerman Posted on July 16, 2009, 12:01 am EDT Last Updated July 16, 2009, 12:19 am EDT

The Dow Industrials lurched 256 points higher yesterday, but a trader looking for action might have found himself bored to tears nonetheless. Indeed, anyone who failed to go home long the day before would have been left twiddling his thumbs Wednesday morning, since stocks bolted for the wild blue yonder on the opening bell. Like nearly all powerful rallies, the move began with a short-covering panic. However, this one was quite unusual in that it had begun on a gap at the start of after-hours trading the evening before. We can’t remember the last time this sequence of events occurred, but the effect was to put bears under serious pressure when Wednesday’s session began.

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The catalyst for the short-squeeze was an upbeat earnings forecast from Intel. The company actually lost money in the second quarter, but the red ink apparently wasn’t as bad as the usual dolts, pinheads and Civil Service rejects on The Street supposedly were expecting. The news from Intel followed strong earnings from the invincible Goldman Sachs. Some readers may recall our prediction that Goldman shares, then trading for around $45, eventually would fall to $29 or lower. So certain were we of this this that we promised to don a grass skirt and dance the hula in Times Square in the middle of winter if we were wrong. Well, it looks like we were wrong. And although we still think Goldman’s financial empire will end up a smoldering ruin by the time the Second Great Depression has run its course, we’d have to concede at this point that it could take a while longer than we’d anticipated.

Barring Armageddon…

Quite a while, actually. Goldman shares are up nearly 20 percent in the last week alone, to $155, and they look like a good bet to hit a Hidden Pivot target at 158.34 before taking a breather. In any event, we’re pretty much resigned to cavorting half-naked in Times Square next winter, probably around Valentine’s Day. With any luck, sometime before then we’ll catch the $100 downdraft in Goldman that is surely coming. If it doesn’t coincide with Armageddon, the drinks will be on us, post-hula, at McSorley’s.

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  • Corey July 16, 2009, 10:05 pm

    Again, I will say (first said it 6/2/09), GS has to go to 178 +/- before it has a big down turn. I’m not saying it will at even that point, but it must get there first before we can catch a -$100 down draft.

  • cameroni July 16, 2009, 9:10 pm

    Cockroaches and Goldman Sachs…??? You keep cracking me up Occdude. Always a good one-liner that can’t be forgotten easily. The funny part though is that your hilarious comment has a fat grain of truth in it. Goldman just might survive the Four Horsemen too!

  • Scott July 16, 2009, 9:08 pm

    Greg,
    In the last two days I have recouped the cost of the seminar by having the confidence to take a sizable portion of my admittedly small 10K account and place it on a natural gas ETF and the technique to stay in the trade as the thing went up and up. I closed half my shares of the pink sheet HZBBF which corresponds to HNU.TO on the Canadian exchange today up $670 and I have good reason to believe this trade is going higher using HP. Now I explained my thinking as I got in and place the ABCDXPT on the chat yesterday afternoon as it was happening. So, I am a believer that this method works for me.

  • cameroni July 16, 2009, 4:32 pm

    Don’t worry Rick. You were not the only one who ate a few words on predictions and I was humiliated myself this year when things did not turn the way I anticipated. But I remain stoic and certain of my of ideas within a larger time frame. Hopefully you don’t lose any sleep or let this affect your year too much. We still think you are terrific. At the worst wee will be crying in our beer together. Maybe we will see you at McSorleys after a big social Hoola in Times Square.

  • Greg July 16, 2009, 3:10 pm

    I guess while you are dancing you can add a dance for those of us that followed your Google and Microsoft put strategy. So much for helping us recover our subscription fees.

    &&&&

    You apparently missed a dozen trades offered in the chat room and in Side Bets that would have recouped your subscription fee 20 times over. If those two are the only trades you’ve taken, then Rick’s Picks is surely not for you, since your penchant for negative selection would appear to be extraordinary. In any case, I’ve asked my webmaster to offer you a pro rata refund for what remains of your subscription. RA

  • Bill July 16, 2009, 12:22 pm

    — Well Rick, there is not much doubt GS would have made $29 had they not been the best connected, best informed and entrusted to perform various market duties for the Powers That Be. Since their status of “most primo” of all the families is obvious, we could cut you some slack…. Maybe a hula dressed in some bright red woolly long johns would do. Let’s not forget you were more than right about Citi.

  • Occdude July 16, 2009, 7:03 am

    Deres “da boyz” and then theres “da big boyz”. You chose to take on the biggest of the big. If nuclear war ever breaks out, I can assure you that artichokes, cockroaches and Goldman Sachs will be last entities standing.

    What gets me about Goldman is that you think they could kick back just a “skosh” of those ill gotten gains to the actual owners of the company, i.e. the shareholders. With the lofty yield of 1.0 percent, you have to wonder what long term investors see in this turd. I’m half rooting for armegeddon Rick, but I guess your destiny lies in hula skirt burns and frost bite (nothing a good Irish whiskey can’t fix though).

    As far as the recent Frankensteinian rally goes, yeah, it’s got some juice, and one could almost make out a reverse head and shoulders pattern on the one year chart, but this baby is gonna blow soon, and the higher it goes the higher it’s gonna blow.

  • Tom Paine July 16, 2009, 1:38 am

    Rick, if there were any justice, Hank Paulson would be frog marched out to Time Square to do the hula in your stead. Did you see the report that chalked Goldman’s great results at least partially up to “reduced competition”. Geesh! Then there is their state of the art trading programs, one which was pilfered and now they are crying that it could give others an “unfair advantage”. I guess they are the only one’s entitled to that! As for Washington, as Dick Durbin points out “…they (banksters) own the place.”

    As Ira wisely pointed out to us, it is healthier for one’s finances to trade with the crooks rather than let our disgust with them influence our trading. However, this state of affairs just makes me feel more than ever that we must support Rep. Ron Paul’s reform campaign. Despite any misgivings I might have about ideological Libertarianism, that is the only ray of hope I see anymore.

    On a tangential note, my mother, a dyed-in-the-wool liberal Democrat, recently took a picture of Obama with the words “We are an Obama family” that the DNC had sent here, encouraging her to place it in her window, and placed it…in the trash can!

  • Bob July 16, 2009, 1:30 am

    Rick, I suspect you may not have to do that hula yet. If Goldman executives sold $700 million worth of shares in the last year (Financial Times article released the evening that same day) I can’t imagine too many people who are responsible for their own money buying what the high level employees are now known to be selling. Buying is probably black box stuff and short squeezes. Don’t get that skirt fitted just yet.


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