Five straight days of asphyxiating tedium on Wall Street have sapped my enthusiasm for telling you that the stock market is about to behave in some bullish way that is worthy of a headline. However, my latest update for AMZN (a key market bellwether; see below) implies that if DaBoyz cannot levitate the stock within the next day or two, they’ll have to take it down by a hundred points to a level where it can be supported with less effort.
To reiterate a point I’ve made here many times before, short-covering is the only source of significant buying power during distribution phases of bear markets (and yes, that we are in a major bear market is what I am asserting here). But it takes ostensibly bullish ‘news’ to trigger short-covering, and the possible sources of such news have dimmed more than a little over the last several months. Under the circumstances, the burden of proof has shifted to bulls. That is why I have cynically put the word ‘news’ in quotes: because so much of what we read, especially in the financial pages during bear markets, must be taken with a grain of salt.
Too Little, Too Late
In that regard, we are all anxiously awaiting the momentous and still likely announcement of some kind of deal with China. The longer it is delayed, however — and that’s assuming it happens at all — the greater the possibility that it will land with a thud. No one really expects a true breakthrough on trade, only a dialing back of tariffs and a nominal agreement to play fair that would have little immediate impact on international cash flows. Moreover, any positive effect it might have could prove to be too little too late, especially with the economies of China and Europe already in pronounced downturns.