Good morning, everyone, and Happy Friday the 13th! The Fourth Turning is ramping up stronger than ever, and over the course of just 48 hours, the market has turned into an endlessly annoying bore-fest into something electric, exciting, and fun.
Of course, the mega-news last night (for which the world was only provided ceaseless warnings for at least a full day in advance) was the Israeli attack on Iran, which sent crude oil screaming higher. As is so often the case, the reaction was overdone, and about half the “screaming” has left the building.
In turn, about half the panic selling in equities has abated as well. Below, for instance, is the /RTY on a minute bar basis. I am thrilled with this, since it’s going to give me the opportunity to take my IWM puts position and add even more to it.
So where do folks flee in times in turmoil and panic? How about gold? That’s been the case for thousands of years, and gold, bless it, is up about $60 and approaching lifetime highs, as shown here on the weekly chart.
In contrast to this, Bitcoin, which is the safe haven for the deluded and clinically insane, seems to have truly stalled out since Inauguration Day five long months ago, and it’s actually down thousands of dollars right now.
Just in case anyone wasn’t convinced that fear had re-entered the scene, the VIX dispels that myth. I think the dreadful pounding of volatility is finally over, and it’s not out of the question we’ll be back into the 30s or even 40s sometime this summer.
The funny thing (and not “ha-ha” funny, but “geez, Tim” funny) is that I would have probably seized the opportunity to cover my XLE and XOP shorts last night at terrible losses if extended hours had still been open, but I was stuck with them. Good thing, too, because although they’re both still up, the prices are much more manageable now, and who knows, I might even just trim them some instead of ditching them altogether.
The reason this is funny is because only an hour or so before things went crazy, I already had learned a “life lesson” with Adobe (see last night’s post) which I promptly dismissed. ADBE is, in fact, down hard after earnings, and here I am with a short position just over half the size it was at the close yesterday. Jesus, what a dope.
Anyway, crude oil has pushed its way all the way through its formerly-failed right triangle pattern, and it’s not clear to me if this is a bullish breakout or, more likely, an anomaly. The damage is done, and I think the failure of the right triangle will ultimately express itself.
The thing is, one look at the XLE shows that it is busted, and Iran or no Iran, my bet is that this sucker is going to be a lot lower in a few months.
The market is about to open as I am typing these words, so I’m going to get into the war, so to speak, and amplify appropriate positions. As I said of the /RTY, shown below, we have rapidly moved from terrifying (the blast toward the green line) to wonderful (the utter and total failure of the market, pushing us safely beneath the Fibonacci once more).
Hang on to your hats. It’s going to be a big day.
