Rick's Picks

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Rick Ackerman
Thurs, Sep 22, 2005

Excerpt from Rick's Picks (website).
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December Gold spiked to 476.20 yesterday, just a hair shy of the 476.50 hidden pivot we've been using as a minimum rally target. Once above the pivot the futures would become be an odds-on bet to reach the next at 483.00, an impediment that looks sufficiently daunting to warrant shorting, albeit with a very tight stop-loss. Assuming a tradable pullback occurs from that number, we would expect the rally to resume after we've had a chance to take some profits. Our rally target would be 500.00, which, as I mentioned here earlier, is not only a formidably round number, but a precise, major hidden pivot as well.

That doesn't necessarily mean the $500 barrier is going to stop the bull market in its tracks, only that it should be regarded as a block of concrete no matter what occurs. Which implies that if December gold closes abovelet's say $505, in the same week that it first achieves that threshold, the rally is probably just getting started. But let's not get too far ahead of ourselves, since the goal is not to see who can billboard the highest target for bullion, but rather to ascertain how likely it is, at each hidden-pivot rally target that is achieved, that the gold price will go still higher.

Concerning all the other stocks, even though I believe the market is especially vulnerable to a collapse over the next six weeks, I'm not confident enough to bet the ranch on it. We hold Citi puts as a proxy in any event, but I must concede that the stock held up fairly well yesterday while quite a few others were getting pounded lower. We'll have a better idea whether the decline in the broad averages is about to accelerate by observing Citi's interaction with a hidden-pivot support this morning at 44.51. That's my minimum downside projection for now, but if Citi trashes the support (i.e., exceeds it by more than 4-5 cents) within an hour or less of first touching it, it would be warning bulls to reef the sails, and bears, to increase the size of their bets.

Rick Ackerman
email: publisher1@rickackerman.com

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