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

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.

Rick Ackerman March 26th, 2018

Posted In: Rick's Picks

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