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posted on 21 May 2017

Expect Short-Covering To Take A Breather

Written by , Rick's Picks

I posted a 2390.25 rally target in the chat room Friday midway through the session, but the futures never quite got there. At the closing bell, they had failed in this relatively modest task by 2.25 points. In retrospect, as the chart makes clear, buyers felt no urgency about taking on the 2388.75 peak where Wednesday’s refreshing but unfortunately short-lived dive commenced.

rally.2017.may.19.caption

Looking just ahead, I’ll go out on a limb with a prediction that because short-covering bears have been temporarily squeezed for all they’re worth, they will be unable to furnish sufficient buying power on Monday to push the broad averages into new record territory.

Click for large image.

But don’t expect stocks to fall apart - only to screw the pooch for a couple of days until bears have recouped enough confidence to be ready for another ass-whooping. Bears forced to cover short positions continue to be the main source of buying power in this bull market, but even they need a rest now and then.


Note from the author: If you don’t subscribe to Rick's Picks but would like to join great traders from around the world in the chat room, click here for a free two-week trial subscription. You’ll also receive actionable trading ‘touts’ and invitations to frequent ‘impromptu’ sessions where Rick ‘takes requests'.


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