This week, we, at Evolution will devote this piece to the stock market and related aspects. We cannot go into deep detail due to the lack of space. With that said, we look look at the present prices with an near term outlook.
Oil
The most traded commodity and most important item for any economy. Both Brent and US light crude appear ready to challenge their recent highs set back in March. If Brent breaches $139 and US passes $130, every economy will be in trouble. One serious negative that has not come to light is refinery capacity. At present, the US is running full tilt with around 18-million gallons of gasoline. A plus for the climate and economy is more electric cars because the US will never build another refinery. If our economy was full trottle, we would need 20-million gallons. Gasoline is at highs. Last Friday, it was $4.25 per gallon. Diesel broke $4.30 and nationally, the four dollar per gallon fears the approaching $5 per gallon. Can you see the problem? Do you hear that Chairman Powell? How about the Fed's shill, Janet "Yellen" Yellen who admitted that she was wrong on inflation? We stand by our call, End the Fed!
Dr. Copper
The US has passed an infrastructure bill, so the long-term outlook is for higher prices. This translates to its testing of the high of $5.04. At present, copper appears to be forming a sideways or consolidation pattern. We like two firms, Freeport McMoran (FCX) and Taseko Mining (TGB). Electric cars need a lot of copper.
Wheat and Grains
Prices have declined despite higher costs for fuel, fertilizer, pesticides and labor. In addition, most state utilities are seeking price hikes. Nationally, 80% of corn has been planted, 73% of spring wheat and 66% of soybeans. The market is very sensitive to news like Russia allowing food exports from Ukraine. I would not trust them. They could claim any shipment and keep the commodity. This relates to our next section...
Shipping
The Baltic Dry Shipping Index (BDI) is in an uptrend after diving down in February. The high is 5650 and low is around 1300. This too appears to be forming a consolidation pattern. The top of the range is around 3400 and bottom resitance at 2000. We do not recommend any firms due to new technology and oversupply. Bottlenecks appear to be easing, but this can change overnight with news.
$Gold
We love what our founders love, but it is the enemy of fiat. I read an article about the ex-central banker of Canada (Dodge) who hates gold. The nation sold all its reserves. He says, "It cost money to hold and it doesn't pay a dividend." The liar! Governments and central banks set regulations. If they recognized gold as money, then you could use your gold as collatteral for a bond and then, gold pays a dividend. Central bankers are liars!!!
Anyway, gold is in its second attempt to challenge the high of $2078 it reached in March. It is building cause to retest the high. With the world at historic highs in debt, the future looks good. There is one thing in the long-term charts that gives me concern. There appears to be a reversr H&S pattern. At the moment, top resistance is $2078 and bottom strength is $1750. We like three firms. Wheaton Precious Metals (WPM), Barrick Gold (GOLD) and Argonaut Gold (ARNGH).
Housing
In the US, housing broke to a new all-time high for an existing home at $391,200. The mortgage rate broke over 5% to which means less buyers for homes. The outlook is not very promising with higher rates coming. However, all commodities will hinge on the dollar.
$King Dollar
There is a new test/price point. If the dollar surpasses 103.82, watch out! It could test the high of 105 and then, 120 could come at us. This will hurt all economies.
Market Indexes
We stand by our previous call for the Dow to test a low of 29,000. The transports to hit 11,000 and the SPX to touch 3400. Peace.
