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November 7, 2018 | Midterm Results Trigger a Bullish Frenzy, but Why?

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 I projected a 549-point Dow rally here Tuesday night, I wasn’t expecting it to unfold in a single day. The actual gain was 545 points, an exuberant reaction to a midterm election that will split power on Capitol hill between the two parties. The rally left the Industrial Average exactly 771  points shy of the record-high 26961 achieved on October 3, but I’d need odds to bet that it won’t be reached. If so, and the blue chip average makes a presumably marginal new high, we should look for ways to get short, since many factors weighing on the stock market before the election will still be present. They include a strong dollar that will hurt the earnings of multinationals, an incipient collapse in residential real estate, rising interest rates and corporate earnings that may have peaked. In addition, any further gains from pro-business legislation on Capitol Hill are unlikely, since Trump’s legislative agenda will be stymied by a House now ruled by anti-business Democrats. Under the circumstances, Wall Street’s celebration could prove to be short-lived.


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November 7th, 2018

Posted In: Rick's Picks

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