Oil Surges Past $106, Federal Reserve To Hike With Yields Above 5% And Yields Will Drop

Hey folks, welcome to VerifiedInvesting.com. My name is Gareth Soloway, Chief Market Strategist here. Now, oil is surging to the upside. Yields have now surpassed 5%, highest level on the 10 year yield since 19 years ago in 2007, just before the financial collapse. And guess what? The Fed is likely to hike rates tomorrow, but in my opinion, the charts and the data says yields will fall on that. Think about that. How crazy is that? That they're going to hike interest rates, but the 10 year yield is likely to pull back on this action. All right, I'm going to explain everything right here in this video. We're going to deep dive into the charts, into the psychology and into the data. Here we are at Verified Investing. Before we get into it, just a reminder, Gareth's Top Squad, that's my premium YouTube for $10 a month. It includes a live Q and A's, exclusive videos, epic disc accounts, and swing trade alert posts on YouTube. So join that, it's only $10 a month. It is a no brainer of epic value. Now, we got to jump right into oil. So first off, take a look. Oil just traded as high as $106.54. Monster move here today, as there's no sign of any resolution yet, let alone any negotiations. The Houthis continue to attack Saudi Arabia to block the Red Sea. The Iranians continue to put up roadblocks in the Strait of Hormuz. And diesel, which is the lifeblood of the economy in trucks, transporting goods, which is basically inflationary as it gets passed through to the consumer, continues to make new all-time highs. But I'll tell you this, guys, I have shorted oil. In fact, today I added to my short position on oil. I'm going to show you exactly why. You guys know I'm not shy about sharing the positions I take on Bitcoin just as it was breaking out. I said I had a $5 million position long in crypto that paid off beautifully. Here I am short not $5 million on oil, that's for sure, but sizably solid position short on WTI crude oil. All right, so let's jump into some other key things here. Number two on the list after oil, and we'll look at the oil chart in just a second. But the 10-year yield surging today to 5.04%, that was surpassed, or it did surpass the high from 2023 and made a higher high going all the way back to 2007. Now, remember, in 2007, we had the blow-off top before the financial crisis. Is there a link here? That's something that investors are concerned about as the stock market is selling. So lots going on here now. Listen, yields have pulled back. We're trading back basically at 5%. As long as we don't close above that 2023 high of 5.02%, I think we're likely to see a drawdown on the 10-year yield in the coming days and weeks. All right, let's go to the charts, and then we'll get into the psychology of everything. Here's the chart of crude oil. Take a look. Currently now even above the level I just showed you at 106.62 near the highs of the day. Incredible move to the upside. Now, you did hear that I was short here, and I added to my short pretty heavily today. And the thought process here is simple. All right, so what we have is a massive move to the upside. This is now what we would call a measured move. In addition, we're coming very close to what we would refer to as the 786 Fibonacci. What I do is I take this high pivot. We draw this down to this low. So you're basically taking your 52-week high to your recent low, extend that out sideways, and we're coming right up into this level here. In addition, so we know we have the 786 Fibonacci, which historically has proven itself, but we also, look at this, you take the low of this candle to this high here, and then we take this and we map it out. And look, literally this low to where we currently are is a perfect measured move. Do you guys see that? Isn't that remarkable? I love the geometry and the statistics and the data on the chart. So we have a measured move on oil concluding today, low peak to high peak. And then we take that same distance. We put it right down here and we take our low peak right there to our high peak and exactly that amount to the upside. All right. In addition, lastly, I'll just point this out. If we take a look at the band, this is your 786 and we're right inside of this zone. So we have high pivot and high pivot and we're right inside of this zone right there as well. All right. So again, listen, there's no such thing as knowing for sure. I certainly don't have a crystal ball, let alone inside information. But when I see chart signals, when I see overbought or oversold conditions, I'm liable to put myself into a position to have probability in my favor and thus over time making money in the markets. All right. So let's talk a little bit about this here, folks, as we continue on. Again, great move up in oil. It is pulling back just a shade. We'll check back in on that. But let's go to the 10 year yield. This is fascinating. The 10 year yield currently trading at 5.012 percent. Remember, this is the trend line right here that marks the high from 2023 right there at 5.02 percent. So we're still below that early this morning. We did push and pierce that level right there, but it then came back in. But we know that oil is the main culprit here. Oil going up is pushing yields to the upside. So that's obviously putting pressure on interest rates. And you might say, well, what does oil have to do with interest rates? Well, it's oil price going up is inflationary. How does the Fed combat inflation? They raise rates when there's inflation. How do people feel about buying the U.S. government treasuries? They don't feel so good, right, because they know that if they buy it for today and there's inflation, then they're really going to get back. Maybe they get back a hundred dollars for the hundred dollars they put in. But what's that really worth in real dollar terms? And that's the conundrum. So inflation drives yields up. Now, I did say this. So the Fed, there's a 92.5 percent chance the Fed hikes 25 basis points tomorrow. I think they're going to do it. In my mind, it's a done deal. I also think counter to what most individuals are believing, that it'll actually cause interest rates to fall. Now, bear with me as I explain this. So right now, there's you have the president, which is saying don't don't raise, in fact, cut. You have 40 trillion in U.S. debt. You have a Federal Reserve where we're still trying to figure out Kevin Warsh. Does he have a backbone to do what he has to do to curb inflation? Or is it all talk? The markets aren't sure. Investors aren't sure. And so what's going on here is investors, without knowing if the Fed has a real backbone, they are being like, you know what, if I'm going to loan the U.S. money, which is when you buy a treasury, you're loaning the treasury of the U.S. that money. And the U.S. treasury is then going to pay an interest rate buyer or buyers of U.S. treasuries or people loaning U.S. money are saying, I want I don't really trust. I don't really trust the administration. I don't trust politicians. Look at the debt and look at the Fed. The Fed, they did QE, QE1, QE2. We don't really trust them. So they're demanding a higher interest rate. If if if Kevin Warsh and I just keep on wanting to say Jerome Powell because it was Powell for so long. But if Kevin Warsh comes out, raises and stays steadfast and firm, what it's going to do is increase the trust that buyers of U.S. debt have in the U.S. and therefore they will be willing to accept lower interest rates. In other words, if the Fed proves themselves tomorrow and stays hawkish, raises, but also the commentary needs to stay hawkish, then you likely will see a relief pullback in yields or relief rally in bonds. Bonds going up means yields coming down. Do you guys get that? I think that's a very important nuance here. And it's actually what I'm predicting. I'm predicting the Fed is going to show up and deliver what the market needs. So actually yields can come down. And I'd for the president's insightful advisers to tell him this, that actually if the Fed proves themselves, interest rates will actually come down. Now, listen, the short end is going to go up, right, because the Fed controls the short end. I'm talking when I'm talking about interest rates, I'm talking about 10 year, the 20 year and the 30 year. Think about that. OK, so those are the ones the market controls. The Fed controls the short end. The markets control the long end. The long end is the problem right now. That's the one that that Scott percent Treasury secretary is trying to buy back and manipulate the long end of the yield curve. Pretty wild stuff that we live in right now. All right. Back to the charts we go. So the 10 year yield currently at five point oh one percent. You have U.S. oil crude oil holding up here trading right at one oh six fifty right where we talked about it earlier with a big move up. Yes, Gareth Soloway is short oil here. We'll see how that pans out again. Maybe I'll get smoked. Maybe I won't. We'll all find out in the next few days, won't we? But the key here is let's go to the S&P because this is something that's fascinating to me. So you guys know this. If you've watched my trading game plan, you know that I've been following this trend line here. Seventy five, 70 to 75, 75 on the S&P 500. Right, right here. OK, I've said as long as we stay above here, then I am bullish on the S&P near term while we're still above it. But look, we are hammering. In fact, we touched this level today, but it's still holding. So again, if this pattern, which, by the way, pattern recognition is key for any chartist up move sideways consolidation, this is a bullish pattern. It generally resolves to the upside. It tells us we should be rallying. Now, how would we rally if the S&P saying we're going to rally? Well, I guess yields would have to come down and oil would have to come down. Notice I'm favoring a pullback in yields here and I'm favoring a pullback in oil. So you can see how the charts are aligning here. Now, it doesn't mean I'm going to be right, but at least the chart on the S&P is saying rally. The chart on the 10 year yield is into the double top resistance. All right. The chart on oil is measured move. You can see how I'm using the charts to my advantage to not make me right all the time, because I certainly am not right. I have my fair share of losses, but at least it puts the odds in my favor. I'm not arbitrarily saying like, oh, well, my gut feels like this or my heart or my, you know, that's irrelevant. In fact, it makes me wrong more often when I go with those things. It's all about the data. And that's so, so important. All right. So that's where we are right now on oil. Oil is the main driver here of yields until the Fed decision tomorrow. I will say this. If the Fed does what I say it's going to do and raises and stays hawkish, the yields may try to come down. But if oil goes up three or five bucks, yields are eventually going to push up. They have to. OK, but if we can get a pause on oil or a pullback on oil and the Fed delivers and shows that they have a backbone that they will listen, by the way, long term, I don't think they have a backbone. Let's be clear on this. But I think I think Kevin Walsh knows that he has to deliver here to give confidence to the bond market. And if he does that, then we should see oil coming in and we should see interest rates or the 10 year yield falling. All right, guys, that's what I have for you today. Before I go, just a reminder. And this is key, guys. Just a reminder. I am sponsored right here by the Rumble Wallet and Rumble, by the way, fantastic company, multibillion dollar publicly traded about as legit as they come, which is awesome. But as always, folks, I love showing you guys that I have it on my phone, the app right here on my phone. And again, I use it to swing trade crypto swing trade gold via tether. It is awesome. It's easy to use. Like again, I'm not a genius at computers by any stretch. Easy enough. And it's like a publicly traded company. So it has the backing. Right. It's not just a fly by night shady company. And this is SEC regulated everything. And it's so easy to buy and sell Bitcoin right here. In fact, I nibbled on a little Bitcoin today just around that seventy six thousand level, but very small position long. But I did right at the technical level. We'll see where that ends. But ultimately, if I'm right, that the markets go up and Bitcoin probably goes up, although the Clarity Act later today does pan into that. But just in regards to Rumble and Rumble wallet, guys, the code verified 10 with the number 10, that's going to get you ten dollars in stable coins. So download it. Use that code. It'll be awesome. Get your free ten bucks. And then also remember, you can fund it being credit card with credit card, with moon pay, with debit card, with bank account, whatever you guys want to do. Rumbles legit. All right. You guys have a great one. Thanks so much for tuning in. I appreciate each and every one of you to the nth degree. Thank you guys again for being amazing to watch these videos and give me all the positive feedback you do. I do appreciate. Have a great one. Take care.