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Since the March 27th peak, we have seen a few mild pullbacks in the major stock market indices. That March high although late in the quarter is precisely what our work had been suggesting since the year began. As usual, they didn’t make it easy. I remain of the opinion that it was not a peak of significance. Rather, the market would embark on a one to two-month decline that would be less than 10% and bottom by Memorial Day.

Thursday was an odd day. The stock market was up roughly 1% but there were an equal number of stocks going up than down, not exactly a bastion of strength. There were also more sectors declining than advancing. Apple (AAPL) and Nvidia (NVDA) pulled up the major indices and as you know, I think both stocks should use rallies as selling opportunities.

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Chatter this morning is that Iran is set to attack Israel over the weekend and the U.S. is unwavering in their support. What a mess. I am little surprised by the magnitude of the pre-market decline. The is key is where everything closes on a Friday. If the bulls give up on the first rally attempt, it could be an ugly day, especially if stocks trade at new lows for the week. That would give very little incentive for folks to buy ahead of what appears to be a volatile weekend.

Q1 earnings season starts today with the banks on tap. JP Morgan and Wells Fargo are first. Both stocks have risen significantly into the reports, so a sell the news thesis wouldn’t be a shock. A surge higher to new highs would have me contemplate harvesting some acorns in the sector.

You know what’s surprising about the mild pullback so far? The defensive sectors like staples and utilities are not proving any cushion as interest rates continue to surge, like we saw in 2022. Remember when most pundits were looking for 6-7 rate cuts this year? I was in the 2-3 camp with the risk being less. Right now, the 2-Year is telling us that only a single rate cut is coming and not until late in the year.

Finally, I started hearing radio ads for gold. Of course, the metal is at new highs. What happened to those ads when gold was at $1500? They might not ring the bell, but these ads, Costco selling out of gold bars and the parade of pundits on TV touting gold certainly have my ears ringing.

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On Wednesday we bought PDBC and RYSPX. We sold EMB, PCY, DXHYX, and some levered NDX. On Thursday we sold EAT.

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