Well, now what? Honestly, this is becoming a bit silly. We are at the same spot we were near day’s end last Friday, even though a mountain of events have taken place since now and then. Let’s just all agree the bulls aren’t giving up without a fight. Thirteen years of effortless profits are a hard habit to break.
One market that is muscling its way higher, however, continues to be crude oil. Oil is deep into the triple digits now, and gas prices where I live are approaching six bucks a gallon. How people think the economy is going to thrive with rising interest rates and sky-high energy prices is beyond me, but, hey, I just work here.
The longer-term view of crude oil illustrates how hearty the lift-off has been. As I mentioned yesterday, I finally pulled the plug on my last surviving energy short (APA) and have stood fully aside so that TNRevolution can run barefoot through energy bull gains.
I would also make mention that Treasury Bonds, which had received absolutely no love for about a year’s time, have enjoyed a nice little rally as well. It seems that the notion of an interest rate increase at every single Fed meeting is dissipating, since the inhabitants of the Eccles Building have a nice, fresh excuse for being “accomodative” now that the whole Covid thing has worn out its welcome.
To my eyes, the entire equity market depends on the one pattern below, which is a somewhat longer-term view of the /ES futures. If it can push past Monday’s highs, it’s an easy blast higher to the next Fibonacci level. If, however, it slips below the midway mark of this pattern, we’re in for a big new leg of this nascent bear market.
As I wrap up this post, a little more than half an hour before the opening bell, the ES and NQ are down only about a fifth of a percent, and the /RTY small caps have actually slipped into the green. I remain mildly-aggressively positioned on the short side, but more cautious than last week.
