Starting To Turn Less Bullish As Concerns Grow

I hope everyone had a great Father’s Day weekend. Aside from not having my own dad around and having one of my sons delayed, it was the best Father’s Day imaginable. We had a 9 hole, parent/child golf tournament with my wife, son and father in-law where we made three birdies. That’s three more than I expected. A little swimming, a little office time and a lot of couch time watching the US Open. My wife made one of the all-time great meals which says a lot since she is a true gourmet cook. And she topped it off with this brownie dish I saw on Ree Drummond’s, Pioneer Woman, that was so beyond rich and gooey and decadent. We also had our first fire of the season which was long overdue.

And to avoid my daughter chirping about not being mentioned, here is a pic from her friend’s graduation party last week.

On to the markets. I am starting to grow more uncomfortable being a strong bull. My 2026 forecast called for a peak by July 4th and then a 10%+ decline in Q3. The 10% decline in Q1 threw me off a bit. While I do not believe the bull market is in danger of ending this year, I am concerned about a correction next quarter and I don’t want to fall into complacency. Before you ask, there are a number of reasons for my shift and I will list one today, the U.S. dollar.

Also in my 2026 forecast, I took the very contrarian viewpoint that the dollar was bottoming and would rally. A strong dollar is headwind for the stock market and sometimes the economy.

Next, I want to show crude oil. Recall that the day of the peak at $119, the data suggested lower prices in the face of a “war” with Iran. The “BUT BUT BUT” crowd was out in full force, telling me all the reasons why I was wrong. Subsequently, I updated that forecast for a minimum downside target below $80 on crude oil. Now with that achieved, I think there is more downside to $70 and possibly into the $60s which is great news for consumers who worry about energy prices.

What is puzzling is the behavior of the transportation stocks. With energy falling sharply, this sector should have rallied with a strong stock market. The Dow Transports are first and the tradable ETF, IYT, is second. That huge rally in April can be explained away by a parabolic move in Avis, but I really hate rationalizing away things. IYT has a different set of stocks and includes Uber which the Dow does not.

Finally, although the SpaceX emails have quieted, they are still coming in. Sometimes I wonder if people actually read my replies. I feel like I spent a lot of time specifically addressing my thoughts on SpaceX and other very high profile IPOs HERE. I invite folks to reread that issue. Under no circumstances was I buying SpaceX for myself, my family nor our clients on day one. It was not happening. The stock could have gone up 1000% or down 99%. I was was not interested. The stock did open at $150 and raced to $225 before doing a U turn. That was very much in line with what was expected. And not a single thing has changed for me. I usually wait 3-6 months before touching an IPO although I did trade Circle and Cerebras in shorter time. In 3-6 months, the hot money is gone. The dumb money typically moves on. Volume dries up. Information becomes more widely available and trading behavior develops where I believe I can have an edge instead of emotionally gambling.

On Thursday we bought IGV, BUG, MANH, more FDN and more MDB. We sold RYPMX, XLF and some JPM.