4/8/2026 - With the overnight ceasefire, we see estimates of inflation (especially as reflected in oil prices) coming down and stocks rallying significantly. I went back to 2006 (over 4900 market days) and looked at all occasions when we closed with over 80% of all stocks above their 3- and 5-day moving averages, but less than 50% of stocks above their 50-day averages. That represented only 157 of the days. Near-term returns in SPY (next five days) underperformed and were barely positive, but over 20 days, the upthrust days significantly outperformed (+1.69% vs +.78% for the rest of the sample; 105 days up, 52 down). That outperformance continued to out 50 days.
This is a great example of how many of the directional edges in the stock market play out over time frames longer than most traders are looking. In the current market, it may well be that the oil market will be a sensitive gauge of whether peace or conflict will prevail in the Middle East. What market history is telling us is that near-term pullbacks are often valuable entries for medium-term upside momentum following bullish breadth thrusts.
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4/7/2026 - I'm seeing a number of articles in the media outlining the potential impacts of crude oil going above $150, emphasizing the impact of higher energy prices on consumer confidence and consumer spending. A number of the traders I work with are therefore carefully monitoring crude oil and natural gas prices and assessing how these might affect countries that are importers vs. those that produce and export energy. This is a great example of how world events lead to investment and trading themes that find diverse expression. Inflation would not affect all markets and all countries equally, setting up potential opportunities for market participants, even as there are broader economic threats.
Indeed, my AI summary of this topic indicated quite a threat to oil exceeding $150/barrel (see below). Conversely, indications of renewed production would be especially helpful to estimates of future growth. All eyes will be on oil and related markets near term.
"Crude oil at $150 per barrel would likely trigger a severe global recession, a substantial rise in inflation, and intense volatility in financial markets. This price surge, equivalent to a major tax on consumers, would stifle demand, cause gasoline prices to potentially exceed $6–$7 per gallon in some regions, and force sharp contraction in manufacturing."
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4/5/2026 - Here is a chart of historical stock market data that, unfortunately, may be of increasing relevance. Please note the following:* From 1929 to 1949, the Standard and Poor's 500 Index, measured in inflation-adjusted terms, went from 545 to 193, losing over half its value in a 20-year period.
* From 1968 to 1982, the inflation-adjusted index went from 957 to 359, again losing over half its value.
* From 2000 to 2009, the inflation-adjusted index went from 2860 to 1226, once again losing over half its value.
The good news is that, over the broad span of history, stock prices--even in inflation-adjusted terms--have been in a bull mode, rising over 15-fold since 1982. The bad news is that there have been significant declines along the way that hurt investors near retirement.
Since 2009, the Index has risen over five-fold in inflation-adjusted terms. Now we see rising oil prices and signs of rising inflation and the beginning of slower growth. We see long-term rising debt in the economy.
History teaches us that we may be entering a period in which the return of our assets becomes as important as the return on our assets.
