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August 19, 2018 | Stock Market Has Found a New Reason to Rally MUCH Higher

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.

When the Dow Industrials rallied 400 point last Thursday, I wrote here that it must be predicting a settlement of the trade dispute between the U.S. and China.  I went on to forecast that the prospect of improved trade relations would send the blue chip average significantly higher, into the range 27k-28k, implying a rally from current levels of as much as 2300 points. Lo, Saturday’s edition of the Wall Street Journal bore me out with this headline: ‘China, U.S. Chart End to Impasse’. There is good news in this, but one possible trouble spot. First the bright side: A summit meeting between Trump and Chinese leader Xi Jinping is scheduled for November, following midlevel talks next week between U.S. and Chinese officials to lay the groundwork. This means that, according to the old Wall Street adage “buy the rumor, sell the news,” the stock market has several months in which to rally on speculation that the two leaders will reach and agreement on trade that changes the status quo for the better. But if ever there were “news” to sell, it would be a rosy agreement on tariffs between the two countries, since, at that point, it would be hard to imagine the news getting much sunnier.  And that’s why I will be looking to short stocks on the eve of the summit. However, I’d still have to concede that, over the long haul, if Trump is successful in putting global trade on fairer footing, as he has already done with Europe, it would boost the case of those who have been predicting a rise in the Dow to 35,000 or higher.

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August 19th, 2018

Posted In: Rick's Picks

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