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February 27, 2020 | Shorts Have Mounting Uncertainty on Their Side

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.

Wednesday’s Whoopee Cushion bounce trapped buyers when the short squeeze apexed around mid-session. The subsequent dive has continued into early evening and portends some tough days ahead for bulls.  I’ve provided some precise downside targets in my latest update for the E-Mini S&Ps, but suffice it to say that if the lower of them is achieved, the Dow would be down another thousand points. Short covering is by far the most powerful source of buying right now, but with so much uncertainty about the potential economic impact of the coronavirus, bears can afford to hang back and let stocks fall.  They will continue to be squeezed from time to time, but expect their panicky reflex to diminish over the near term.

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February 27th, 2020

Posted In: Rick's Picks

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