Always the sartorialist, TradeGateHub coach Dale Pinkert wore green on Talking Markets yesterday “just to have some contrast from the big red board.”
CROSSED THE RUBICON?
Oil was up 35% this week, finishing yesterday above $90 a barrel. If you’ve been watching Dale’s Talking Markets residency for a while, you’ll know his target over the past few months for oil has been $78, which we blew through early in the week. And that target was without the effective closure of the Strait of Hormuz (which he has also been worried about).
“We have definitely crossed the Rubicon,” he said. “The Strait has never been closed. I don’t think the world’s ever going to be the same on this event.”
He also doesn’t see a quick ending to the conflict. “They’re broadening the war, and a lot of countries are going to be dragged into it. This is a regional conflagration that could turn into a regional hot war… This is existential for Iran. They’re not going to stop fighting because we’ve had enough and we think the job is done.”
So, where next for oil?
Dale’s short answer: “I don’t know where the top could be.”
Dale’s longer answer: “I said when I was looking for $78, that if we start closing over $80, then you’re talking $110, $120. We could be there Monday or Tuesday.”
And if we continue on that path, it’s “going to affect everything,” Dale said - prices, availability, the inflation target, potentially rates. It’s such an enormous chain of events that it totally overshadows February’s unexpected jobs miss.
💡Dale quoted Marc Chandler: “Almost every recession starts with an oil shock.”
THE OIL/DOLLAR RELATIONSHIP
Dale has been looking for a move to 103 in the DXY over the longer-term - though he went home short the dollar last weekend. “I said if they do attack this weekend, I have to prepare to reverse out of my shorts, because if we get over 98, we’re going to have a breakout,” he said. “On Sunday night, the dollar didn’t kick in very fast, and I had a chance to reverse out.”
Now, he thinks the move to 103 is underway. “I’d buy dips in the dollar, and sell rallies in the euro,” he said. “Sometimes crude and the dollar run together. I know everyone says it’s not a petro currency, but it sure acted like one this week.”
Side note: CAD strengthened this week too, which Dale said is because they’re a big oil producer.
A WEAK WEEKLY CLOSE IN THE S&P
The S&P has been in a range since at least the beginning of the year, and this week we finally closed under it. Now, Dale sees 6,500 potentially happening in a hurry. And if it breaks under that level, it could go to a target Dale’s been talking about for a while: 6,100, which he sees a good chance of happening “maybe into April.” That could potentially be a buying opportunity.
“[But] that’s the bullish case,” Dale said. “The bearish case is we negate the breakout at 6,100, and then you’re talking 4,400.”
AGS UPDATE
On Jan 30, Coach told us on Talking Markets that "wheat is going to be the silver of the grain complex.” And:
“Eat your Wheaties,” Dale said. “Wheat looks great, corn looks great. Beans look good.”
DALE ON…
BONDS
“It’s a very tough trade,” he said. “I’m not willing to flip the coin. There’s [been] no flight to quality because this is inflationary… Maybe the market hasn’t gotten hammered enough for flows to come back into bonds.”
GOLD AND SILVER
Last week, Dale said he believes gold’s in a corrective phase and he was looking for a “failing rally” to around $5,300/$5,400, which is pretty much what happened this week. As for silver, it was even weaker. “If things get crazy, maybe we could squeak out another rally in silver to $100, but I think the highs are in.”
TECH
The “buying software, selling semis” trade is working now, Dale said, giving a hat tip to Gareth Solloway for the trade. “Maybe software stocks are the staples of the tech sector.”
CRYPTO
Even though Dale played the long side of crypto since BTC was in the low 60s, he’s bothered by the fact that “we still have a confirmed low here.” “I usually don’t get long markets that confirm a low,” he said. “And it did it on multiple timeframes, not just the daily.”
AND FINALLY…
“Going home Friday, there isn’t a lot of things I want to be buying right now,” he said. “But it’s a good time to have a shopping list.”
Dale’s advice is have a look at your charts this weekend and list out what you’ve wanted to buy, and at what levels. “And then when it gets there, you don’t have to plunge and go all in,” he said. “Buy some, probe, and relax.”
Thank you MP, Marvin Gardens, PNWtom, and everyone else for tuning in live! We’re looking forward to Talking Markets on Monday with Prometheus Research founder Aahan Menon. See you then…
Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.
