At yesterday’s lows, the stock market’s exhilarating plunge may have felt like an avalanche. From a calmly dispassionate technical perspective, however, it was just a tightly controlled shakedown designed to manage, and to make the most of, the nasty selloff that had occurred overnight in Chinese markets. In fact, the opening bar was so deep-in-the-hole that sellers were all but spent before the regular session got rolling. This made it possible for DaBoyz to accumulate shares at fire-sale prices, then to run those shares back up the old wazoo for a quick-turn distribution at profitable prices.
To be sure, the bounce was relatively feeble and must have disappointed the wiseguys. More than than, it saddled them with the difficult task of unloading their inventory on widows and pensioners Monday night in a very nervous news environment. However, my hunch is that the stock market will not fall apart just as the new year gets under way; it’ll take some time to set the hook. To be sure, the opening-day weakness must have taken DaBoyz by surprise. But now that they’ve caught a whiff of investors’ new mood, they will be better able to deal with it — and to profit from it. This means they will try their hardest to maneuver shares higher in the weeks ahead, the better to distribute shares at fat premiums well above what they would have fetched at Monday’s lows.
A Dangerous Game
This is a dangerous game, of course, since the global news environment is as volatile and unpredictable as we’ve seen it in a long while. Add to that the fact that China is not experiencing a mere slowdown but the beginning of an economic collapse, and even the best-laid plans of those who control the stock market could quickly go awry. China’s mounting problems, by the way, should not come as a surprise to regular readers of this page. We’ve harped on them for months, even as the pundits and the mainstream media continued to treat each downbeat report as evidence of a mere slowdown. China is far too pumped for a soft landing. If the so-far slowdown continues to gain momentum, as I expect, all bets are off that DaBoyz can maneuver U.S. shares higher ahead of a crash. Click herefor a free trial subscription that will allow you to access the chat room, Rick’s daily touts and intraday alerts, and ‘impromptu’ analysis sessions online for two weeks.
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