A few important notes:
We have been stating for days that OILS/ENERGY stocks were extended, stretched and overbought. They finally started to come in yesterday. As of now, this is a normal pullback. We suspect yesterday’s action will also presage a pullback in the price of oil.
Our theme has not changed…and frankly, we expect it not to change right now in that January 29 was an important top while the lows of Feb, late March and early May are vital lows. Remember, after a great 2013-2014 off of QE3, the major indices went into approximately an 18 month trading range with a couple of ugly dips down during that range. We believe what you are seeing is simply another consolidation of the gains from the election to the end of January. Everything else is noise. As long as we hold those lows, this will be considered a nominal intermediate correction. Time would be the only issue. If those lows are taken out, we expect significant selling…but we continue to believe they are good lows for now.
While rates and energy prices are due to pull back…they do matter. We are amazed when anyone says they don’t matter. Lower rates have been the lifeblood for markets. Easy money has been the steroids. Money is still easy around most of the globe with Japan and Europe still negative and still printing. Higher oil prices are a huge tax on the consumer and business. Both must be watched.
Decent gap to the downside this morning. Blame is on trade talks which were supposedly going well Monday but not going well today. Blah blah blah.
TIF gapping up nicely. TIF has had decent insider buying recently. RRGB whacked for almost 20%. Never ate there. TGT also hit.