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December 20, 2018 | ‘Death Cross’ Says This Bear Has Only Just Begun

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.

We’ll be hearing a lot more about the “death cross” in the days ahead, mostly from business-channel pundits who know as much about stock charts as you and I do about particle physics. The death cross occurs when a trading vehicle’s 50-day moving average falls beneath its 200-day moving average. This usually signals a big selloff ahead.  If correct this time, the 4000-point plunge that has already occurred in the Dow Industrials and the 500-pointer in the S&Ps are merely the start of a far more devastating bear market still to come. Don’t believe the Wall Street shills who say the death cross has not always been correct. In this case, it has appeared simultaneously not only on the charts of the Dow and the S&Ps, but also in AAPL, the most-owned stock of them all. Under the circumstances, odds of a false signal are remote.

$30 Million Homes!?

If so, we shouldn’t be too surprised. The severity of a bear market will always be commensurate with the folly that has preceded it. In this case, we have really overdone it. A telling example is the large number of homes currently listed for $30 million and up. Another is the number of huge companies whose shares sell for more than a hundred times earnings. Listen to the pundits and even some high-profile eggheads who should know better and you could almost believe such things are normal. In fact, we’ve strayed so far from Kansas that it will not be possible to return there until stupidnomics has been crushingly rebuked.

And don’t think we’ll get off with just a stern warning. It will take an epic heap of trouble to bring about the needed catharsis. Before the earthquake subsides we will have to re-learn yet again that we cannot borrow our way to prosperity. Everyone will understand by then that Fed quackery can only end badly, and that the free lunch they purported to offer us ultimately had an intolerably high cost.

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December 20th, 2018

Posted In: Rick's Picks

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