Has the stock market put in a double top? Higher oil prices and higher long term interest rates are creating a witch's brew that make it a strong possibility. Greenspan, scared the bond market so it fell significantly yesterday and today. The 10yr yield is now at 4.27. The April oil contract closed at 49.01. If oil moves over $50 and the 10yr breaks 4.5%, in my opinion we are in a real danzer zone. My simple index is that any combination of oil prices and 10yr yields that adds up to and index level of 10 is a sell signal, for example March of 2000 oil was $34 and 10yr was 6.8% adding them together gives you and index value of 10.2. Our economy is probably even more leveraged now so we may not even have to get that high.
The euro, gold and gold shares rested today which was very encouraging. They all could have fallen significantly on the higher rates. Oil stocks are on fire and probably represent one the few sectors where a buy and hold strategy applies. Even if your timing is wrong time will bail you out.
Barrick has been one of the strongest major gold stocks. Good earnings and guidance, increasing production. Surprising how few buy ratings on the stock.
Next week- will CPI do the same damage as the PPI did? Will GDP be revised higher as the rumors advertised.
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