The Pattern I Called Weeks Ago Is Playing Out Exactly
The Same Cycle, Headline Then Reaction Then Wait
KR Opinion
We are now entering the beginning of the fourth week of the war, and the rhetoric from both sides continues to escalate with no sign of cooling down. Trump has been threatening Iran directly, and Iran has been firing back with equal intensity. There is a deadline approaching in the next several hours, in which Trump has stated he will take out all of Iran’s power infrastructure if the Strait of Hormuz is not reopened. Iran responded by saying it would begin bombing Israel’s power infrastructure as well, including desalination plants.
Every time one side issues a threat, the other side seems to go to the next level, and neither appears willing to back down. The continuing gaslighting by Trump and others in the administration stems from the belief that because they have bigger bombs, Iran is about to fold its cards. Iran does not appear to be anywhere close to doing that.
This brings us directly to the crude oil market, which is rising again. In my analysis of the past several YouTube videos, I continue to emphasize that the markets are likely to stay well above the $95 level. We did see Brent trade up to $113, so we are starting to approach the highs from several weeks ago, when the initial reaction occurred. As we consider the potential for this situation to worsen, it is doing just that. This will likely begin to impact economic output over the next few weeks. We may start to see industries cut back some of their activities simply because of the high energy costs, and demand might begin to decline as a result.
Overall, reviewing the news listed below, there is nothing particularly significant that we need to address right now. It’s a fairly typical week news-wise, but the crude oil market still dominates everything. Oil will continue to lead the trend, and we remain in the cycle I described several weeks ago: the headline triggers a reaction and illiquidity, followed by normalization, then waiting for the next headline. That cycle appears to be exactly what we are experiencing at the moment.
The markets declined significantly overnight, with the S&P and NASDAQ both falling more than 1% at one point. However, once London opened, it appeared that Europe was taking more of the impact. My view is that traders sold S&P futures as a proxy hedge until the European markets opened, and once they did, we saw a rally in U.S. futures while European indices were hit hard.
The other major update is that we saw heavy selling again in the Wave Tech Database on an intermediate basis, which is really reversing any future projections. The markets are falling sharply, and even metals are taking a hit. Gold has dropped to its 200-day moving average, and silver is slipping below sixty-two dollars, which I warned is a risky sign. If we close below that level, we could see much lower prices, possibly down into the forty-dollar range. There is some relative strength in gold at current levels, but it seems this may be margin call driven, with traders selling gold, silver, and other assets to cover their losses in equities.
