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Think Twice about ‘Staying the Course’

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In the wake of today’s thousand-point selloff in the Dow, we’re going to be hearing ad nauseum from every shill on Wall Street about how investors should stay the course. Most will be ignorant of technical analysis, or even disdainful of it, but I’d suggest keeping your guard up while the charlatans trot out PE ratios, valuation models and their own curve-fitted stats and charts to explain why the Dow is going to 50,000. My own indicators do not yet allow for a confident call on whether the bull market is dead, but those who have followed Ricks Picks for any length of time, or even for just the last few weeks, will know that we can hit the big, small and medium swings with sufficient precision and consistency to take most of the uncertainty out of the game. We did this in AAPL with a heavy dose of skepticism when the stock was rampaging suspiciously toward new record highs last week; in gold, which topped 90 cents above a 1690.80 target we’d drum-rolled weeks ago; and in the E-Mini S&Ps, whose massive selloff today turned just a millimeter from the target shown in this chart.

Distributing Share to the Rubes

Many traders must have been frustrated when, a few weeks ago, stocks initially shrugged off scary reports about the spread of coronavirus.  Although shares fell for a day-and-a-half, the subsequent rally would have caused otherwise cautious investors to doubt themselves. Mainstream analysis of the rally was invariably accompanied by news stories suggesting the virus was not spreading as quickly as had been feared.  This self-serving interplay between sleazy promoters on Wall Street and their benighted lackeys in the news media is why, without tongue in cheek, we frequently characterize the stock market as one big carnival midway. For in fact, it was obvious to anyone who has observed the so-called smart money in action, that stocks were being held delicately airborne in order to distribute them to widows and pensioners and all the other rubes.

I said so bluntly last week, with particular emphasis on the brazen distribution that was taking place in AAPL. It fell 38 points, or nearly 12%, after I raised the warning flag. In the weeks ahead, we will be treating all rallies with skepticism, but without dismissing the possibility that stocks are eventually headed much higher. If you are a lurker and want to see how it’s possible to straddle this line while putting out winning trades on either side of the market, consider sampling Rick’s Picks at no cost by clicking the ‘Free Trial‘ button at the top of this page. Those of you who are especially interested in gold are bound to find our latest forecast, which calls for a rally to as high as $2285, worth a read. If you take me up on my offer, be sure to drop by the Trading Room to say hello!

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