Don’t be fooled by this post Thanksgiving rally. The shorts have had a party lately, and they are notoriously hair-triggered. So when their profits are threatened, they rush to cover their shorts.
Back when I was a kid hanging out in the customers’ gallery at Walston and Company’s downtown Philly office, on bear market rally days like this, the old traders were fond of saying this little ditty. “He who sells what isn’t his’n, must buy it back or go to prison.”
I heard that a lot! It was right up there with “Don’t fight the Fed,” and “The trend is your friend.”
The trick then was figuring out what the Fed wanted. They didn’t tell us back in those days. Policy was all a big secret. We needed guys like Dr. Doom, Henry Kaufman, then Wall Street’s top bond strategist, to read the money supply tea leaves every week to tell us what the Fed was doing. We’d all gather around the news ticker machine late every Thursday afternoon to see the money supply data, breathlessly awaiting Dr. Kaufman’s pronouncements.
Today, we have no such problem. Because of that, the message from Monday’s rally isn’t Booyah! Here’s the message.