Election Cycle, Stats and Outlook

- Keep your face toward the sunshine and shadows will fall behind you.

- Walt Whitman

Mid-Term Year

There seems to be a cycle for everything. This makes them seem irrelevant. However, like the stars on your team, some are worth more than others. Generally, the first year of a new administration produces a favorable outcome. The second year becomes crucial because it becomes a barometer to the party in power to control Congress. If they lose there, they can lose the next presidential election. 

As stated repeatedly, we do not endorse either of the two political parties. We feel that they are both corrupt. With that said, the political situation is what it is with the hope that a third party arises. Anyway, there is a historical repeating aspect of the mid-year election data. It points to a market peak around the third week of April. After that, the market regresses until November and then, rallies. 

The recent market activity seems to follow the historical election cycle. To keep you reading and to build suspense, Sebastian will hold his prediction until the end of this piece. 

Stats

Just like cycles, there are stats for everything. In football, players perform better on grass than turf or warm weather compared to cold or wet conditions. However, humans like schedules and schedules become traits and the foundation of stats. 

Strait of Hormuz

Under normal conditions, shipping traffic runs between 1200 and 1300 vessels per day with 20% of the world's oil production. It is also important to mention that one-third of the world's fertilizer passes through the strait. The temporary cease-fire has resulted in around 102 ships seeking to pass safely through the strait. Nevertheless, the war has resulted in moves effecting stock prices and economies. The cease-fire announcement saw US oil crater to close at $85 last Friday. Under charting, it had a dark cloud which means more downward pressure on oil. We also saw gaps at $77 in price with the lowest at $69. We see a consolidation in that range level. Brent oil has more gaps and thus, more volatility. However, we see it also forming a consolidation in a similar range as US crude. 

The fear put US gasoline prices up over 36%. Diesel has risen 50% to over $5.00 per gallon. It is over $6.00 in Ca. In Europe, gasoline rose 32%. Even with that worry, the European market has risen by 17% and the US indexes have erased all their yearly losses with a new record in the S&P 500. 

The 10-year note only rose .3pts. Oil and financing relate to everyday pocketbook expenses. There are two other big commodities worth mentioning. Aluminium inventory dropped 400,000 tons. Doctor Copper use to be .70-cents per pound. It closed at $6.07 on Friday. The chart looks wild and crazy. There are many gaps. The lowest is $5.28. Banks forecast that copper prices will range from $6 to $8 per pound. We see a consolidation at $5.90. 

Outlook

With all the termoil and loose cannons like Netanyahu, the back and forth changes to agreements and the points in the negotiations, inflation spike, supply bottlenecks, etc. There is too much that can go wrong. We believe the mid-year cycle will hold sway. The market should regress until November. During that span, we will check the volume and market sentiment for a clearer picture...Peace.