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Expect Rally, Then Sell It: McDonald

Thursday, 27 Dec 2012 | 5:43 PM ET
Expect Rally, Then Sell It: McDonald
As the U.S. veers toward the so-called "fiscal cliff," it's likely that the stock market has one more rally, Larry McDonald of NewEdge says.

As the U.S. veers toward the so-called "fiscal cliff," the stock market appears to have another rally ahead, Larry McDonald of NewEdge said Thursday on CNBC.

On "Fast Money," McDonald cited the market's activity 10 days ago.

"The markets ripped when it looked like Boehner put on the table an extension of one year on the debt ceiling," he said.

As a result of the offer from House Speaker John Boehner, McDonald said, Republicans expected "a ton back from the president" but "didn't get any 2013 or 2014 real spending cuts."

What that means is that it appears increasingly likely that Washington lawmakers will strike a small deal to send the market higher – temporarily.

"We're probably going to have one of more those moments of fear, and then we're going to get a 30- to 40-yard punt, and it's going to be a deal without an extension of the debt ceiling, so that basically puts another on Jan. 30, and that's when we're really going to have to deal with it," he said.

"That's why the market's probably going to rip and rally, and then you sell that rally hard unless you see an extension on the debt ceiling."

Trader disclosure: On Dec. 27, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Mike Murphy is long AAPL; Mike Murphy is long C; Mike Murphy is long TGT; Mike Murphy is long M; Mike Murphy is short AMZN; Jon Najarian has nothing to disclose; Steve Weiss is long BAC; Steve Weiss is long C; Steve Weiss is long JPM; Steve Weiss is long HK; Steve Weiss is long BBY; Steve Weiss is long AIG; Steve Weiss is long RIMM; Steve Weiss is long SWKS; Steve Weiss is long QCOM; Steve Weiss is long YUM; Steve Weiss is long M; Anthony Scaramucci is long C; Anthony Scaramucci is long GS; Anthony Scaramucci is long WFC; Anthony Scaramucci is long YHOO; Anthony Scaramucci is long WMT; Anthony Scaramucci is long SBUX.

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