3 to 2

This is a morning to watch, positions are in place. We have three markets that are stretched and two markets that are in limbo. The stretched markets are commodities/oil, interest rates, and the dollar, while the two markets in limbo are stocks and gold. I expect the stretched sectors to collapse from this general area. The two in limbo are headed in sharply different directions, gold down, stocks up.

I am usually early; we are not on trend for the coming moves, so patience may be the most important trait right now. Sentiment is a key component at this moment. Here is a comment from Bloomberg’s John Arthur this morning, in his words:

Sentiment is key:

“How bullish are we feeling? If the American Association of Individual Investors’ weekly survey is anything to go by, not very. It has been carried out for decades and is much followed as a measure of sentiment. Retail investors are simply asked if they’re feeling bullish, bearish, or neither. And this week, fewer called themselves bullish than in any week since September 1992:

This is quite something. There were more bulls after 9/11, during the Covid lockdown, and in the throes of the Global Financial Crisis, than there are now. Most of us can intuit that sentiment is weak and shaken at present. The nastiness of pandemic-era life, and now the war in Ukraine and the sharp rise in inflation, will see to that. But lack of bullishness on this scale is startling. “

Going Forward:

Markets are on the front line here, this is a battleground. Stay tuned for adding more leverage after the breakthrough of the lines.

11:00 Update…Getting on the Soapbox..

The market seems to believe that it now realizes where it went wrong in the Covid trade 2021. It believes that high P/E’s were the problem. Ackman’s Netflix trade dump is being shown as the example. To me the market has it half right, yes Ackman paid too much, but the problem was where he invested. If he had bought Tesla rather than Netflix, it would be a far different story.

The Climate Change Revolution is where opportunity exists today. It will far surpass the Agricultural, Industrial, and Technological Revolutions that have gone before. Yes, the companies are very expensive, but their future is much more important to the economy than Netflix, Peleton, and Facebook. It was time for all the marketing fluff to go away.

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