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November 28, 2018 | Fed-Induced Short Squeeze Clinches December for Bulls

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.

Wednesday’s monster rally was just the beginning of a surge that can end only when the last die-hard bear has thrown in the towel. Although the short-covering panic goosed stocks into the clouds, the wild-blue-yonder, blow-off phase lies just ahead. Hundreds of stocks, most crucially AAPL, lifted from the danger zone, shifting the herd’s tiny, fevered brains from bearish to bullish in the space of just a single day. Perforce, all news will be perceived as good news for the remainder of the year. And, like clockwork, what I have cynically labeled the ‘Santa Dead-Cat Bounce’ will unfold even as mounting problems in three key sectors — housing, retail and autos — move temporarily offstage.

Dog Bites Man!!!

The trigger for the Dow’s 617-point wilding spree was a few cryptic words from the Fed’s current blatherer-in-chief, Jerome Powell. As the clock struck noon, he said something that was construed as dovish on interest rates, causing stocks to take off like the proverbial bat emerging from Hell. We’ll leave the debate over exactly what he said to the infotainment world’s talking heads and other useful idiots. But it boiled down to something every market-watcher on Earth already knew — i.e., that although the central bank might tighten one more time this year just to be perceived as walking the walk, that will be it: no more rate hikes (and maybe even a little easing somewhere down the road…who knows?) To judge from Wall Street’s reaction, we should assume that a thousand-point rally will greet Powell’s inevitable announcement of — who’s counting any longer? — QE4.

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November 28th, 2018

Posted In: Rick's Picks

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