down!
We have many indicators that influenced our thinking. More on that after this. It appears that my book will never be published by conventual means. I may have to resort to self-publishing. Dear Reader, this blog is free. When you consider all the correct forecasts that you have read on this site, I ask you one favor. If I self-publish and offer my work on this platform or elsewhere, please purchase it. If you like what I suggest, please suggest it to two of your acquaintances. Thank you.
Indicators
We gave our readers many predictions in 2021 and even prior to then. An important recap: When oil was in the $70s in November 2019, we liked it. The COVID-19 crash sent it down to $10 bucks. We thought this was crazy. We predicted the seasonality would recover any losses. We were right. Last Friday, West Texas hit $115 a barrel and Brent rose to $117 a barrel. Our first indicator says every time oil spikes over $100 a barrel, a recession follows.
The precious metals are not indicators, but they fall under our calls in the recent past. We stand by our founding fathers and favor a strong currency. We stood firm on Barrick Gold. It went nowhere for two years. It is awake! It should test and breach its $30 high. We called gold to hit $1946. Now, $2,000 gold is a given. If volume picks up, a new all-time high will happen this year. You might ask yourself, if these people know so much, how come they are not rich? Well, we don't have the financial resources. When we make a recommendation like Barrick, we are buying 500 shares. If we had the means to purchase 10,000, then, we would be rich. Continuing...
Housing gives up a clear picture of our economy. We believe that everyone should seek to have their own property and domicile. Now, we fear what is happening in real estate. The medium-price home in the US is well over $200,000. Prices are rising over 10% everywhere. If one compounds the price, the results are frightening. Picture your home value or mortgage as a bond. The crooked Federal Reserve keeps rates artificially low. A 30-year bond only yields 2.16%. Get real! Anyway, we will use the 10-Year T-Bill. Why, you ask? Because we want you to understand the near-term big picture. Your house grows 10x more than what the government will pay you. This translates that the medium price home will double by 2028. Maybe President Biden let this secret out in his State of the Union speech? He said, "No one making $400,000 a year will be taxed." First, no average citizen makes anywhere near that much money. Consider, in three years, that person is technically a millionaire? Secondly, housing will not be affordable for police, nurses, firemen, postal employees, etc. We will see more cities planning affordable housing measures. They fear that all service people will flee due to a lack of affordable housing in a safe neighborhood. This is and will continue to be a big problem in our society and economy.
Crime
It will rise with the wealth gap. It will rise with the lack of opportunity. We must remember that we are not a homogeneous society. The lack of clean, safe and affordable housing will negatively affect our economy. "Black Lives Matter" won't help this picture.
2cd Indicator
Do you know what "window dressing" means? It refers to all the funds associated with the market. They purchase stocks at the beginning of every month. This is a hidden Bull aspect to the market. Big money coming in every month. It pushes up prices. Well, last week we had a very poor window dressing. If the Bulls could not move the market, this says the Bears are gaining control. We have had a series of lower highs and higher lows. In addition, NASDAQ displayed a "death cross." The 50-day moving average fell below the 200-day MA. Consider this? The stock market has a circuit breaker of 7%. Trading will be halted if this level is breached. We had it happen 4x in 2020. None since then. However, if it appears, expect some panic selling and margin calls.
Stock/Commodity Ratio (3rd-Indicator)
As stated, oil is on fire. It is not only over $100 per barrel, but the charts say West Texas could hit $167. Ouch! Anyway, this ratio says when it falls below 41, a recession follows. We are below it. Forget palladium. Russia controls almost 90% and they are in no mood to help anyone. If you need a doctor, you will find inflation running rampant. Dr. Copper has his prices at all-time highs. Bottom line: inflation is the virus in commodities. The temperature says our pocketbook will feel the pain. This will not help our economy or the market.
Two More Nails
After the market closed on Friday at the lows, the market received two more indicators. One, there was follow-through on Monday and secondly, the market had the conviction of strong volume to the downside.
Dichotomy
King Dollar rose to 98.67 last Friday. The war in Europe is the reason. Last March with the virus, the dollar hit 104. If things calm down, we expect the dollar to correct. If things get worse, it won't matter?! Anyway, King Dollar should always be on your radar as well as interest rates. Speaking of the devil, the Fed will probably raise the discount rate by one-quarter. This is basically no change. However, their BS controls the narrative. We predict that they won't mention the compound effect on housing. They will mention the unemployment rate which fell last month to 3.8%. Of course, no one here at Evolution believes that. Peace.
