We’re tired of endless wars. If only they (China, Iran, Russia, N. Korea) were tired of war. They’re just getting started.
— Daniel Henninger, Thursday’s Wall Street Journal
Think about it. We have a war in Ukraine and Gaza, ships sunk by the Houthis, threats in the South China Sea, and gang members coming across the lack of a Southern Border. It is only a matter of time before an incident such as happened in Moscow (130 killed) happens again here (remember 9/11).
It is therefore no surprise that oil and gold is rallying. We suggested energy plays two weeks ago. After a strong run-up, I was expecting a larger pull back this week. May futures reached $82.89 and pulled back to $80.44 Tuesday. But in the past two days it has reached $82.76. That may be all the correction. Today (March 28) is the last day of the quarter, January through March. The market was closed for Good Friday. The big runup Wednesday (400+ Dow points) was no doubt funds hurrying to add stocks which have been successful. In that way end of quarter holdings make the fund managers appear smarter than they are!
Our picks include Apache (APA), Transocean (RIG), DIG, Halliburton (HAL), and SLV a silver bullion ETF. Halliburton has peaked at $42 three times in the last two years. This rally should finally take out that resistance. Doing so will be an important buy signal.
The NASD advance-decline line is only one-fifth of its February 2023 peak. But the index is making new highs. The reason, as the A/D line tells us, is that far fewer NASD stocks are participating. Narrowing breadth like this is a sign of a forthcoming top in the market.
April 19 is an important historical date for significant events. I expect that to be the case with topping action for stock. I expect the rally in oil and gold to continue, just as they did from 1972-1981. In fact this looks very much like that period with inflation and higher interest rates. A stock market top will complete the picture.
In the last month, April gold futures have soared from $2,050 to $2,225. The larger story is the long-awaited break-out over $2,000-2,100. This is the start of a larger rally to much higher prices. From 2020-2021 silver doubled from $15 to $30. It corrected to $20. It now badly lags the gold rally but should eventually catch up.
The reason for a stock market top and a gold rally is because companies and countries piled on debt at lower and lower rates. That scenario is gone. Debt coming due will be at higher rates making more bankruptcies a reality.
