So why didn’t Friday’s short-covering panic produce another thousand-point blowout for the Dow? Buyers just didn’t seem to have it in them. Instead, Wall Street had to settle for a less-than-dazzling 747-pointer that could have impressed only Jim Cramer and a few other market cheerleaders who get paid to tout bear rallies like they were the real thing. How do we ‘know’ it’s a bear rally? Because, is why! Who in their right mind could believe that even the most urgent short-covering could redeem this hoax with a move to new-record highs?
Of course, for a smug permabear to even pose that question in a headline is to invite trouble. Yes, housing and autos are in the dumper, corporate earnings have peaked, AAPL is no longer capable of an up-yours wilding spree and the Fed has tightened one time too many. But there are a couple of ‘what ifs’ that could conceivably put bulls back in the game. Suppose, for example, that China, whose economy is starting to spiral downward, were to give Trump the trade deal he wants? And then suppose the Fed, remorseful over its last, incredibly stupid rate hike, were to announce QE5? Then what?
Well, for starters the Dow could surely squeeze a quick 1500 points from those two headlines, especially if they came back-to-back. That would leave the blue chip average an inch shy of 25,000, sitting just above a 24828 ‘external’ peak recorded December 12. Now take a good look at the chart (inset). Would you want to get in the way of bulls at those heights, just as they were starting to feel their oats? That’s what I thought. Admittedly, the two prayed-for headlines are unlikely to materialize just because the stock market needs them. But it’s not out of the question, especially with a President whose luck has been pretty good.