Folks,
Market Observations for the Week: The SPX rallied into the weekend on the two-week ceasefire with Iran, but the break down in talks over the weekend and Trump’s threat to blockade the straits of Hormuz could give us a gap-down open on Monday. We did add some SPXS and VIX to hedge the “hopeful SPX rally” into the weekend. Our view is that Iran could drag out talks far longer than the stock market expects and that would leave crude oil trading at high levels for several months that could be inflationary into year end. News on the US/Iran war is calling the shots on global markets and the SPX could still test lows going into 4/20-4/21, which is na important turn window in our work. Our view is that the process of negotiations with Iran will take some time and markets will begin to price in more inflation over the intermediate term. Signs of credit risk, illiquidity, and the obvious geo-political risk are warning signs here for the broad market which may have entered a bear market in February. The SPX took out the December low and that is bearish. It is important to keep powder dry until we see a larger VIX spike above 40 and we haven’t seen that yet. The leadership of the SPX has shifted from the XLF(financials) which topped in January to the XLE(energy stocks) which are both late-cycle sectors in a topping bull market. Even though silver and gold topped in the 4/1-4/2 Full Moon – we still hold a core position in the junior miners –the GDX showed relative strength against the SPX last week. The XLE is in a seasonally strong period(Jan-Apr) and is still favored in our work for 2026 – we also like the MOO ETF(agricultural). Our current investment positions were updated on the 4/10 close: 50% cash, 0% SLV, 0% DIA, 10% MOO, 10% GDXJ/SILJ/XLE, 20% XOM/CVX/SLB and 20% physical gold/silver/platinum. We have a 25% overall allocation to our short-term trading account which was last updated on 4/10 to include: 55% cash, 0% SLV, 10% CDE, 0% Barrick, 10% SLB, 25% XOM/CVX/COP.
TURNING POINT DAY
Our turn window for this week is 4/13-4/14.
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