Looking across the Valley..

Other than for current prices, three dates stand out to me in terms of important dates for the current equation, those are:

  1. 8/03/2020, the start of the Covid Bubble.
  2. 8/30/2021, the start of the Covid Bubble Top.
  3. 6/06/2022, the start of the stock market bottom.

So, we are basically looking at a two year market valley and a market that feels like no one has any idea of what the drivers are going forward.

To me it would appear that interest rate hikes are now history. This seems to leave a confused market. Should it try to make new highs? First it has to figure out why the majority of the market players missed the move since the June 6, 2022 bottom. Are the clues imbedded in past performance or does one need to look to the future at new growth drivers.

I would say one starts by looking at what has happened since the start of the bubble top 2 years ago:

  1. Commodities are up 42percent.
  2. Oil is up 24 percent.
  3. Dollar is up 13 percent.
  4. Chip stocks are up 3 percent.
  5. S&P and Nasdaq 100 are flat.
  6. Fang stocks are down 4 percent.
  7. Bonds are down 36 percent.

Bottom line, two things:

1) interest rates were the big story during this period, with the dollar finding help from it;

2) oil is a special story, basically a recent play with the Saudi’s playing their last carbon inducing hurrah by cutting back production, and with a little side issue of wanting to collapse the US economy and help Trump in the coming election.

I would say that over the next year, the stuff that has held up over the past two years should probably be avoided, ie oil and the dollar. That leaves growth stocks and bonds as areas of interest. The key is to determine what those growth areas will be. We will be talking about those areas this week.

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