The Jaws of the Bear Market Tighten as Investors Lose Hope of Trade Solutions

A lack of progress on trade negotiations and a threat to fire Fed Chair Jerome Powell tanked the market on Monday, while worldwide selling of U.S. assets added an element of impending disaster. It was an all-around ugly day with stocks, bonds, and the dollar all trading lower and no sign of dip buyers.

There is a little rebound action developing early Tuesday morning due partly to "significant progress" in negotiations on a trade deal with India that Vice President JD Vance is conducting. However, several reports about difficulties in deal negotiations with Japan, Thailand, and others contribute to the market struggles.

The Trump administration's promises on trade are no longer providing comfort to worried market participants. They want to see some actual deals and not just promises about how wonderful it will all be at some unknown time in the future.

The threats to fire Powell have backfired and should send a clear message to the White House about what investors think of that tactic. While many investors agree that the central bank should embrace a more dovish view and start cutting rates, calling Powell names and undermining the Fed is not the way to accomplish that goal.

At this juncture, the market is deep in the jaws of a bear market, and the primary issue is how much damage will be incurred before it escapes. The situation is compounded by the fact that the economy was likely to slow even if there were no tariffs or trade problems. The uncertainty on tariffs has made the inevitable shift in the economic cycle far worse than it would have been.

On the earnings front, Tesla TSLA takes the stage on Tuesday night when it reports quarterly results. Expectations are very low, but if the report isn't a complete disaster, the stock might be able to stabilize. So far, earnings season has not done anything to help market conditions. A very strong Netflix NFLX report received a good response late last Thursday, but the majority of the gains were given back, and the stock is stuck at some overhead resistance.

Technically, all of the major indexes are a mess. Even with the big drop on Monday, the indexes are still above the lows that were hit on April 7, but it is going to be tough to overcome all the overhead resistance that has been building due to failed bounces.

This is an extremely tough market and likely to stay that way until we have some clarity on trade deals and tariffs. My best advice is to stay patient, maintain your cash, and not be in a rush to put money to work. There will be plenty of time and opportunities to buy when technical action improves.

At the time of publication, Rev Shark had no positions in any securities mentioned.