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Beazer Bears Reach For the DefribillatorRick Ackerman
Our "Beazer Indicator" got off to a flying start Friday with a take-no-prisoners short-squeeze that probably left some bears grasping for their defibrillators. A 138.97 rally target proffered here recently lay more than $6 above the previous day's close, but by day's end the homebuilder's shares had blown well past it, settling at 140.70, a few ticks off the intraday high. In Friday's commentary we had emphasized that Beazer is an ideal bellwether right now -- not just for a consumption-based economy running on fumes, but also for a rampantly ebullient stock market that takes bad news like an addict snorting coke. As we have seen in recent months, nothing seems to trouble Wall Street for long. Not rising oil prices or weak Christmas sales. Not the mounting troubles of its biggest auto producer, nor a terminally sick dollar. Not upward pressure on interest rates, nor a jobless economic "recovery." Small wonder, then, that the shares of a builder specializing in entry-level homes should continue to rise at an accelerating pace that evidently sees no end to the real estate boom. But who will the buyers be? Home ownership is already at an all-time high in the U.S.. Perhaps BZH shares have been climbing vertically on expectations that college students are about to become homeowners big-time, and to hell with dormitory life. Where to Get Short In any event, Friday's rally left one hidden-pivot target for BZH to achieve: 146.93. That number comes off the monthly chart, and it's a very important one. I doubt that even a full-blown mania can push BZH decisively past it, at least on the first try. We took no short position on Friday, since, as I noted in my commentary, Friday afternoons are a risky time to place new bets. But for sure, we'll want to attempt a tightly stopped short if and when the stock reaches 146.93. *** If I'm Lying, I'm Dying I mentioned here the other day that 321gold's Bob Moriarty was one of the very few unalloyed gold bulls who had the timing of last spring's collapse in precious metals precisely nailed. However, I overlooked his recent, manifestly prescient change of heart when I wondered aloud here last week whether he was expecting an explosive rally in gold like our mutual friend John Mackenzie. Far from it. Turns out I didn't see a cautionary note Bob posted to his Web site on November 25. His message really hit home, since it follows on the heels of an avalanche of new subscribers who signed up for Rick's Picks after I aired a piece touting the possibility of big rally in gold. Like me, Bob makes a part of his living catering to gold bugs. But he's not about to tell them what they want to hear - that "gold is about to scream!!" - if the facts at the time do not support the bullish case. We are both true believers, as most of you already know. But there will always be ugly days in a bull market, such as last Wednesday, that will test one's confidence. Of course, even on such days, there are some guys who never stop screaming "Buy gold!" from the rooftops. Jim Sinclair is one of them, but it's not likely that he does so merely to lure new subscribers. More than a mere true believer, he is an out-and-out, certified gold nut. More power to him, I say, since his message, like that of John Mackenzie, reflects not merely a desire to make money trading and investing in precious-metal shares, but to stockpile the world's only true money against an economic disaster that all of us pray will never come. Turning Bearish on a Dime Much as I want to please the gold fanatics among you, I'd sooner see Rick's Picks go down in flames than bend my day-to-day observations unduly in bullion's favor. I have my charts to keep me honest, but Bob Moriarty's integrity is somewhat move evolved, since his instincts alone are capable of turning him bearish on a dime. Here he is on November 25, two weeks ahead of his time: "Most of the readers coming to 321gold.com have a pretty good idea of where I stand on the war in Iraq and the coming Armageddon in our financial system. Well, it's coming but a few too many people are too pessimistic on the dollar and that suggests to me that both the dollar and gold are due corrections. Gold has gone up 10 out of the last 11 weeks and that's probably overdoing it. Nothing goes straight up or straight down. 'Heresy' to Knock Gold "It's probably heresy to suggest gold might ever go down, gold bugs are a loony group. I'd be lot more popular if I were a far more vocal cheerleader under all conditions. But the cheerleaders are popular solely because they tell people what they want to hear rather than what they need to know. And as a result the sheep following them lose a bundle of money on a regular basis. Nobody has all the answers and all any of us are doing is giving our opinion. You will tend to do a lot better if you follow common sense and ignore the crowd. Ignore the cheerleaders as well. "I did some figures on the drop in silver from April 2nd to May 12th or so of this year. The number of outstanding contracts dropped from 125,000 to 75,000 as the price plummeted by $3. It's hard to figure out exactly how much money was transferred from the hands of the silver bulls to the hands of the silver bears but it was in the $10 billion dollar range. Just because some fool comes along and whispers sweet nothings in your ear doesn't mean you have to believe every word. Cheerleaders lose their followers a lot of money. What Bull Market? "How many people have actually pointed out that we really aren't in a gold bull market? The rise in gold since 2001 is more a product of the dollar going down than gold going up. There are a whole boat load of commodities other than gold which have gone up far more. In many currencies gold has, at best, been in a sideways trend. That doesn't turn me into a gold bear, I know what is in store for both the US dollar and our economy. Basically, the middle class is going to have their savings wiped out and the standard of living is going down in a big way. There will be rich and there will be poor, there always are: but for middle class American, the future is grim. "Not today though. When too many people know the 'facts' they cease to be facts. And too many are too bearish on the dollar." *** Two-Tick Stops for
E-Mini? Rick Ackerman _______________ |
