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March 24, 2019 | One More Damn-the-Torpedoes Rally?

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.

Economic news turned menacing last week and featured a yield-curve inversion as well as a grim assessment of the slowdown in Europe and China.  It’s tempting to think stocks were finally starting to show some common sense when they began Friday with a bearish gap, sold off hard for the next three hours, then closed on the low tick of the day after a failed rally. Contrition at last! It increased my already strong doubts that the powerful bounce begun on December 26 is destined for greatness.  However, it will have increased everyone else’s doubts too, and that’s why I am wary of sounding taps quite yet for the ten-year-old bull market.

Mounting bearish sentiment is one of the most powerful things the stock market has going for it at the moment. As long as it continues, the potential for a short-covering rally, possibly even to new highs, will remain. This would surely be accompanied by more ray-rah hubris from The Wall Street Journal et al. about how unemployment is low, wages are rising, and economists are unconcerned about the possibility of a recession. If low unemployment actually meant something, then why is America’s middle class struggling to stay afloat, in hock up to its eyeballs?

Of course, if all else fails, we’ve always got the Fed to come to the rescue.  Yeah, sure. Sooner or later, the epiphany will dawn that we cannot borrow our way to lasting prosperity. For in fact, virtually every penny we’ve borrowed to sustain this transparently nutty idea and the illusion of good times will have to be repaid. A day of reckoning can be postponed, but it cannot be avoided.

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March 24th, 2019

Posted In: Rick's Picks

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