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December 15, 2019 | Watch Wall Street Celebrate Britain’s Election

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.

 

Now comes yet another investable idea to drive the bull market in the months ahead: Donald Trump’s reelection bid looks stronger than ever. His odds jumped following last week’s election in Great Britain. So decisively did voters rebuke Labor’s hard-left candidate for prime minister, Jeremy Corbyn, that it can be safely assumed that neither of his socialist comrades in the U.S. — Bernie Sanders and Elizabeth Warren — has a prayer of becoming president. And because America is not quite ready for a gay couple in the White House, Pete Buttigieg, a man of the far left himself whose track record as mayor of South Bend, Indiana, stinks, will not win either. That leaves Joe Biden, who, even if he gets nominated, will not be able to escape the who-what-me? qustench of Ukraine  and ; and Bloomberg, a white billionaire who is even less likely to get nominated by the wack-jobs who currently rule the Democratic party. Enter Hillary, a likely hail-Mary nominee who will be no more appealing to the average voter come July than she was in 2016.

Dow 30,000 Ahead!

The marginal shift in election odds will be all that bulls need to push the Dow above 30,000. It stood at 28,136 on the close Friday, up just a few points. This was more impressive than it seemed, however, since the stock market was bucking heavy ‘buy the rumor, sell the news” headwinds. The news was that the U.S. and China had concluded the initial phase of a trade deal and that they would start working on phase two right away. (There was no immediate confirmation by China, but that seemed not to concern bulls or short-covering bears.) It is logical to assume that the stock market will not get nearly as much boost from Trump tweets concerning nebulous phase-two talks as it did from the tweet-a-thon of 2019. But this will be more than offset by the perception that Corbyn’s devastating loss has all but killed the possibility of a socialist U.S. president.

Looking at stocks from a technical standpoint, the most potent ammo I’d possessed to throw at bulls last week was a longstanding target at 15.66 in VXX (see chart above), a trading vehicle that tracks short-term S&P volatility. It was hit on Friday after a horrific slide from 27 begun just two months ago. VXX moves lower when stocks rally, and both trends stood to reverse when VXX hit a major low. Although I’d be surprised if a tradeable reversal fails to materialize, I now expect it to be muted. I’m not quite ready to throw in the towel, though, and it’s possible Friday’s 15.51 low will turn out to have signaled a major top for the stock market. We’ll wait and see how things develop in the days ahead, but we shouldn’t count too heavily on making money with the VXX calls we bought on Friday.

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December 15th, 2019

Posted In: Rick's Picks

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