The years 2014-2016 saw the price of crude drop from $110 to just under $30. There is a six-year cycle in various markets. Crude has now reached the high last seen in the last six years occurring in 2018 at $75. That is expected to hold for some time.
This is affirmed with the action of significant energy stocks. Exxon Mobil doubled from $30 to $65. Chevron Texaco moved from $65 to $110. Both stocks are already off those highs. After a good deal of bad news, Apache soared from $8 to $24 and is already off to $19.
Far East demand has boosted natural gas from $2.50 to $4.10. We previously noted that Team Biden has stopped the Keystone Pipeline construction. This makes shipping oil by truck or rail slower and far more dangerous. Yet the same Team approved a Russian Pipeline to Germany, go figure.
Expect topping action in the energy sector.
That same six-year cycle exists in the stock market. In 2015, Chinese stocks peaked early in the year and sold off into the fall. The same thing is occurring now. The China Fund CHN peaked in February at $35 and is now at $27.70. In the U.S. markets, the Transports lead the way. That index is already down from a May peak of 16,000 to 14,473. Our expectations are that we will see corrective lows in August and September. That also coincides with the usual fall seasonal low, so expect a recovery into the spring probably registering a lower high.
It may well be that negative social mood is finally settling in on the markets. All major Democrat run cities are experiencing serious increases in crime. Homeless numbers are out of control in San Francisco. (How’s that defund the police program working?) Liberal Austin has crime rates 38% higher than the Texas mean and 49% higher than the nation’s mean. There is no Southern Border and the Taliban are making significant gains amid our withdrawal from Afghanistan. Protests have been stifled in Hong Kong and Cuba.
Former CA Senator Barbara Boxer, 80, was mugged in broad daylight in her home state. Apparently shoplifting less than $1,000 is no longer a crime in that state.
Brace for a near term market correction.
