Are We There Yet?

Thursday was an ugly day in the markets. It mostly matched last Friday. The main conditions have been met for a low as well as hitting my worst case scenario on the downside. Now we wait and wait, patiently for the washout. A number of folks asked if Thursday was it. I doubt it. A few more days like Thursday should do it without intervening rally days. The bulls’ spirit need to be crushed for a durable low. It’s getting closer.

And for those wedded to a narrative, be careful. This decline is absolutely not all about Iran. Don’t think that a ceasefire or peace plan will be a buy signal for new highs. It will not.

Interestingly, interest rates have risen during the decline in stocks, similar to what we saw in 2022. Bonds are not the
“safe haven” we typically see. That’s because oil spiked and inflation expectations rose.

Here is the 10-Year Note which is the benchmark long-term rate. While the masses were all calling for it to be in the mid-3’s because of economic weakness, I forecast 2026 to see falling short-term rates and rising long-term ones. Rates have really jumped of late. Right now, they are worrisome, but much above 4.75% will cause me to reconsider that statement.

Crude oil is below. For all the media’s focus and attention, energy remains below the $119 where I shared that oil is in the zone for a peak. Data over narratives.

With March Madness in full swing with great games, both UCONN teams are smack in the middle of it. Sadly, the UCONN men’s hockey team had their season end yesterday in Worcester. The men’s hoops team has a tall task tonight at 10pm against Michigan State. The NCAA keeps scheduling these late games. Who can so easily stay awake? Not me. Thankfully, the women play late this afternoon and I fully expect a W. Depending on the outcomes, this guy may do a quick trip to Vermont for some spring skiing or head to DC for a Sunday game. Mother Nature is so fickle this time of year.

On Wednesday we bought PCY, SDS, RSPS, more LRN, more PG and more QLD. We sold some MQQQ. On Thursday we sold SDS, EEM, PCY, WMS, LULU, GDX, TLT, some QLD, some ITA, some MDY and some IYR.