Update on using Research…

Following up on analysis comments made yesterday It appears to me that we may be basing for an upside breakout of stocks based on bullshit, tax cuts, and de-regulation productivity boosts (which will probably be muted at best as the consumer of those goods is going to take a pass). Weak oil prices will probably have less influence on the bullishness than expected as inflation vibes start being incorporated into oil prices, leaving weak gold and weak dollar as the primary drivers. A rising 30-05Y yield curve is also bullish on stocks. That leaves the current historically low 2Y interest rate as supportive but probably a non-event for rising stock prices as the FED remains on hold.

Government debt concerns have been getting a lot of mileage through the 2024 election cycle and the Trump aftermath. In reality, no one in Washington really has the guts to take it on. Trump and Musk gave it a little excitement, but Musk has gone home to rescue Tesla and Trump has veered into his favorite topic, tax cuts for the wealthy.

This has left the U.S. bond market under extreme pressure for the past two years. Basis the Bond ETF TLT it appears to me that some attempt at a rally for unknown reasons will probably arise from these levels, probably as an impending recession/depression will take center stage later in the year and some money managers will want to capture these yields before the market gets an inkling of this coming event.

The chart below, is one that I have presented in this blog many times over the past four years. It uses weekly data on the TLT. You will see the area shaded in red where back in February 2021 I projected an envelope of the market low area that I thought would end in April 2024. We are now a year beyond that, the highlights being the range between the low of the week October 23, 2023, at 82.42 and another being a trading low of 84.89 the week of January 13, 2025. Today, the trading low was 8376.