Crude oil has not heard my bullish forecast. It returned to the bottom of the trading range of $72-82 which has prevailed for several months. Thursday gasoline, Brent, and West Texas Intermediate managed an up day. As said, this occurred at or near previous bottoms. Gasoline made a low dating back to January around $2.20 (futures not pump). But it did rebound from Wednesday’s sell-off. Brent and West Texas Intermediate (WTIC) pretty well matched their August 5 low. Stocks sold off Thursday and that took near all energy shares a bit lower. However, I suspect crude oil is seeking support. Officially we need some crossovers to the upside on momentum indicators to confirm a bottom.
Gold and silver corrected Thursday. Gold dropped $26.70. I suspect the market is testing the breakout over $2,500, an historical first. I expect that re-test of $2,500 to hold. Silver basis October fell 59 cents to $29.08. While gold vaulted $2,500, silver was turned back once again at $30. This trade requires patience but should eventually pay off in a big way.
The NASD 10 NDX has had a very nice run from that Monday low of 17,500 to almost 20,000. It traded to 19,491 Thursday. Dow Industrials bounced further than NDX or SPX nearing the previous high at 41,250. And it only dropped .43% versus 1.68% for the NDX. Likewise, SPX was down .89%. Industrials and SPX are not as tech heavy as the NDX, so their decline was less.
The economy is not near as strong as the Democrats claim. July unemployment rose to 4.3.%. The unemployment rate has risen more than a half percent in the last year. Academic studies back to the 1950s reveal that this has always resulted in a recession. A recession is two lower quarters of Gross Domestic Product output.
The yield curve remains inverted. The three-month T Bill is 5% while the ten-year note is 3.8%. This has been the case for the last two years. This is another indicator which has in the past always led to a recession.
Caution is warranted. Stocks are at or near all-time highs. The unemployment stats and interest rates are flashing warning signs. In this election year, the Labor Department now admits the U.S. added 8148,000 fewer jobs than reported earlier this year. That is monkeying with statistics at a high level and casts doubt on most anything the government reports into the election. Five percent guaranteed Treasury Bills are attractive.
