It’s been six months since we suggested that oil/gas prices would be a critical element to the market’s behavior in the lead up to the November election [see: Dec 7 Update on Oil/Gas.] So far, so good.

continued for members…

The only thing that wasn’t clear at the time was whether OPEC would cooperate. It would seem that they are, perhaps in exchange for the US being more insistent with Israel regarding its offensive. Who knows?  All I know is that inflation is becoming less of a concern chiefly because oil/gas prices are heading lower.  As a result, the 10Y has dropped through its SMA200 once again.

Combined with VIX’s latest plunge and continued dollar weakness, equities are pushing to new highs exactly as we expected.

CL should break below 70 soon… …which is making the 10Y very happy.