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June 5, 2019 | Sure, the Rally Stinks, but…

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.

Although oil prices and Treasury yields have been falling an anticipation of a widely advertised economic slowdown in Europe and China, U.S. stocks are rising as though boom times lie ahead. What is going on?? It would appear that bulls simply cannot control themselves when there is talk of Fed easing. The prospect of QE3 has been in the news lately, driving a short-covering rally that has pushed the Dow Industrials up by more than 700 points in the last two days. The move lost a little power on Wednesday, but it is unlikely to fade much more with the weekend approaching. If DaBoyz can sustain altitude on Thursday, odds are good they will be able to break a six-week losing streak in the broad averages.

Sure, the rally stinks to high heaven and begs to be shorted. However, we should keep reminding ourselves that its very purpose is to gut and disembowel bears who think that merely being right is an easy ticket to profits. It therefore follows that the more skeptical we become as the rally continues, the more steeply it will rise. Can it possibly reach a purely technical S&P 500 target of mine at 3095 that lies nearly 10% above current levels? I remain skeptical about this, but that doesn’t mean I am willing to fight it every inch of the way. For now, we hold no position, having cashed out a profitable ‘counterintuitive’ long in the E-Mini S&Ps entered on Tuesday.

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June 5th, 2019

Posted In: Rick's Picks

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