All client accounts are up nicely for the year and sitting on the sidelines until we get an FTD. A Follow Through Day (FTD) occurs at least four days after a market bottom when the index closes at least 1% higher on greater volume. According to William O’Neil, an FTD has preceded every bull market, but not every FTD has led to one. O’Neil was a self-made billionaire who studied markets for decades and wrote several books on his findings. His system is one of the best I have found because it follows the common-sense logic of human emotions driven by fear and greed. I am not willing to bet my life savings on the idea that because the market has always recovered from every crisis, it will do so again exactly when I need my money. O’Neil’s system gives me the edge I need to succeed; otherwise, the house wins in the end.
The Iran war will likely cost more than anticipated, and it may eventually force the Fed to monetize the debt issued by the Treasury through Congress. The 10-year Treasury yield has risen toward the 4.4% threshold and could move higher from here. Recent reports show the 10-year yield trading between roughly 4.31% and 4.39%, with many analysts viewing 4.4% as an important level for stocks and gold.
Higher yields could attract foreign capital, strengthen the dollar, and pressure gold prices in the short term. I am short-term bearish on gold but long-term bullish because I believe the Fed will eventually print more money, which could fuel inflation and support higher gold prices over time. Gold has recently come under pressure as the dollar and Treasury yields moved higher.
The longer the Strait of Hormuz stays closed, the longer oil prices are likely to remain elevated, and the more global economies could struggle. Roughly 20% of the world’s oil supply flows through the Strait of Hormuz, and some analysts believe oil could rise to $150–$200 per barrel if the disruption continues.
I believe Trump will do everything in his power to bring oil prices lower before the November elections. I am watching the dollar, oil, gold, and yields closely because they will likely determine where the stock market heads next.
Happy Easter!
The curse of Yahweh is on the house of the wicked, but God blesses the house of the righteous. Psalms 3:33