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December 6, 2018 | 700-Point Reversal a Hoax, but Don’t Get In Its Way!

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.

The Dow Industrials reversed 700 points yesterday, turning a morning disaster into an afternoon wilding spree with the potential to end the week on a bullish note. The rally was purely technical, beginning as it did a millimeter beneath an important low recorded on November 23 that had served as a ‘structural’ support. As is the case so much of the time, the downtrend had to penetrate the support, stopping out bulls, in order to ensure that the subsequent rally was light, frisky and unburdened by profit-takers.

Death Dive Ahead

The usual suspects will the say stock market’s ‘amazing’ recovery was due to some specific news development, but in reality it was caused 100% by short-covering. That does not necessarily mean we should presume heavily against bulls in the next day or two. The rebound may be a hoax destined to fail, but this could occur at significantly higher levels, especially if other traders remain as skeptical about it as we are. Whatever the case, we should assume that every uptick is being used by DaBoyz to distribute as much stock as possible. They are masters at this, and if they succeed in a big way, many of us will be thinking the Dow actually has a shot at testing old highs around the time it is actually an inch from resuming its death dive.

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December 6th, 2018

Posted In: Rick's Picks

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