Interest rates are moving up again.
The 10-year yield just jumped from 3.6% to 4% in less than a month.
Rising interest rates can have massive implications that no investor should ignore.
Let’s rewind to the 1970s:
- Interest rates surged between 1972 and 1975
- Result? One of the largest stock market crashes in the last 100 years
Today’s Worry: Is This Just the Beginning?
The recent jump might look small, but there’s a bigger concern:
Could this be the start of a resumption of the 2022 interest rate surge?
When we overlay the 1970s chart on today’s rates, the similarities are unsettling.
The Catalyst: Learning from October 1973
In 1973, the Yom Kippur War triggered a massive interest rate surge.
Here’s what happened:
- Egypt and Syria attacked Israel
- Arab Oil Embargo followed
- Oil prices 3x almost instantly
- Result: A wave of inflation and rising interest rates
Today’s Oil Situation: A Different Story
Unlike 1973, oil prices in October 2024 are lower than a year ago.
However, the current Middle East tensions are causing concern:
- The recent conflict escalation led to a small oil price jump
- Interest rates mirrored this movement
🚨 Ready to Improve Your Returns?
At Bravos Research, we’ve been helping our clients capitalize on these market trends.
We recently booked a 13.55% profit on our $EXEL position.
Get access to:
- Real-time buy and sell alerts
- In-depth market analysis
- Monthly macro newsletter videos
Click here to access our premium research
2024 vs 2022: Spot the Difference
Let’s compare the current situation to the 2022 oil shock:
- 2022: Oil prices were rising for 3 months before the Ukraine invasion
- Today: Oil prices are trending lower
We can also use moving averages to stay objective on the momentum.
In 2022, all moving averages were pointing up, indicating an uptrend.
Today, all moving averages are still pointing down, indicating a downtrend.
This bearish technical setup is why we have an ongoing short trade on oil on our website here.
Inflation: Another Key Difference
Another key different between 2021 and today is inflation.
Unlike 2021, inflation in the US is trending down sharply.
Today’s falling inflation is also starkly different to the 1970s, when inflation rose in 3 progressive waves.
This inflationary wave caused interest rates to rise with it.
Today, inflation continues to decline rapidly.
Given that interest rates tend to follow inflation over time, our expectation is that interest rates will trend lower, not higher (assuming no major Middle East conflict).
What This Means for the Stock Market
Lower interest rates are typically positive for stocks, just as rising rates are negative.
The S&P 500’s recent action supports the negative correlation between interest rates and stocks:
- Price broke out of a 3-month consolidation
- All moving averages pointing upwards
- Clean, well-defined price channel
This suggests the S&P 500 remains in a strong and healthy uptrend.
Want to Profit in This Market?
At Bravos Research, we’ve made some incredible trades throughout this bull market:
- Average profit in 2024 = 17.37%
- Average loss in 2024 = 3.78%
We send buy and sell alerts on individual stocks, ETFs, crypto, and commodities.
Start your Bravos Research membership now
Subscribe to our YouTube for more in-depth analysis and Follow us on X for real-time market updates!
Read more: Nobody Will See This Coming
