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March 26, 2018 | Short-Covering Panic Could Help ‘Set the Hook’

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

I spoke too soon when I congratulated bears over the weekend for keeping their cool. On Monday they were in a full-blown panic, desperately trying to cover short positions they regretted not having exited on Friday. The broad averages easily recouped Friday’s losses and looked hellbent on recovering the even more significant losses from earlier in the week.  Although I strongly doubt the rally will hit new record highs, I’ll be ready for it nonetheless if buyers obliterate just a few more prior peaks on the hourly chart without pausing for breath. Were that to occur, I would grow even more wary of the possibility that a move into record territory would set up Mama Bear’s onslaught perfectly. Permabulls would be giddy at that point with visions of Dow 30,000, while bears would be even more “bullish” as the pain of fighting the tape became not merely pointless, but excruciating. For now we’ll put aside such speculation and focus on the lesser charts, where virtually every significant trend change must begin.

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March 26th, 2018

Posted In: Rick's Picks

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