Hi Kirk,
Many charts beginning to show a third wave of the first wave of the final 5 wave is in play.
That's a set up for fast price rise in secondary and tertiary stocks. As big caps and Fangs tease new highs, the mid and small caps get their day in the sun.
It's volatility on the up side.
Very much reminds me of 1999 to 2000 dot com distribution top.
The fly in the ointment for me to watch will be staying in the energy E&P's, and pipeline companies that are C Corps.
All recessions have been preceded by energy price spikes since 1970.
In the few cases where a recession was avoided, it resulted in a doubling of the cost of energy.
If inflation turns out to be transitory, but make that transitory on a longer term time frame, then the Fed will be able to back down interest rates.
If that rate reduction is initiated too early, it will result in a soft landing AND an explosion of demand for fossil fuel energy.
We currently are at a demand for crude that is borderline exceeding the world's capability to pump more oil.
If a recession is avoided, an energy spike is assured. IMO
The safest place to be if we enter a final wave 5 that takes us to ATH's, I'll be selling into it early.
I will hold all of my oil energy stocks and wait for a shortage of crude that will take a long time period to resolve ( one to two years minimum).
I'll hope to avoid greed and sell all energy stocks early.
Anxiously await their decline as new crude volumes meet the market: Guyana, Suriname, Brasil, and finally the Gulf of Mexico. All long time events to complete.
In between 25 to 35 percent of my initial cost ( bought in 2021) will have been returned via dividends.
I see this as a good set up for a wicked decline to impact the 2024 election cycle.
As the Dems want to spend unabashedly (i.e. student debt forgiveness), the Republican House of Representatives will curtail election gimmicks, IRS expansion , and the green new deal and its wasteful misallocation to unreliable energy sources and it's wasteful expenditures of transitioning to the electrification of EV's.
Nuclear (both small modular and large for electricity), hydrogen based Fuel cell EV's (which do not require a completely new electrical infrastructure and can complete a fillup in 5 minutes) will prevail as plug in EV's remain popular in urban areas).
There have been two era's that an energy spike did not cause a global recession. Both ultimately resulted in the price of crude to double. We may well be looking at the third if rates peak below 5% - an unwritten goal the Fed won't discuss, compliments to the huge debt of the world's sovereign countries and their deflating fiat currencies.
I think it is time to super glue the buy button. If this things rockets to ATH, I'm selling out to ar least be running on the market's money and a whole lot of 2 and 5 year Treasuries.
Bob |
