"If I Weren't Nervous, I'd be Worried"

Brit Ryle

Posted January 12, 2024

Late last night, the U.S. and the U.K. fired over 100 missiles at 60 Houthi targets in Yemen. I’m sure you’re well aware that the Houthis have been using drones, rockets and even small ships to indiscriminately attack cargo ships in the Red Sea for over a month now – it’s about time the U.S. responded. 

After all, something like 12% of the global economy is routed through the Suez Canal and Red Sea – did anyone think lobbing rockets at cargo ships wouldn’t get a response? 

The only question I have about all this is: what took so long?

And the answer is apparently that the Houthis finally shot an anti-ship missile at a U.S. Navy vessel. Yep, that’ll do it…

And to the (thankfully) few in Congress that are denouncing the response as unConstitutional, just… stop. The U.S./U.K. strike at the Houthis is fully covered under the same internationally accepted standards observed at every playground in the world: you hit me, I’ll hit you back. 

You don’t have to go ask mommy for permission to sock them in the nose… 

It seems like there isn’t an issue out there that politicians won’t politicize to suit their own fundraising agenda. 


Oil spiked higher this morning on news that the U.S./U.K. socked the Houthis in the nose. But probably also because Iran seized a tanker of Iraqi oil headed to Turkey. Apparently, this was America’s fault too, Iran said: “After the theft of Iranian oil by the United States last year, St. Nikolas tanker was seized by Iran’s Navy this morning with a judicial order … it is en route to Iranian ports.”

Of course, the price spike for oil faded pretty quickly during today’s trading session – U.S. oil production should stay at record highs above 13 million barrels a day through 2025. U.S. oil and especially natural gas to Europe will be a solid business for the next couple of years. Pro Trader Today editor Christian DeHaemer offered up his thoughts on a few tanker stocks on Tuesday

For LNG shipping, I could add Golar (NASDAQ: GLNG) and its 4% dividend and Dynagas (NASDAQ: DLNG) and its forward P/E of 3 to the list. 

Check out the VIX

These price spikes for oil tell us that traders are a bit nervous. Yes, each time oil spikes, it retreats pretty quick. Doesn’t change the fact that any headline about the Middle East gets a “buy oil” response.

I think the risk is high that we get a “sell stocks” response to some news about: 

A) earnings 

B) rate cut forecast 

C) GDP growth forecasts 

D) rolling disaster that is China’s economy

E) all the above 

A guy on Jeopardy the other night made a great Yogi Berra joke, saying that if being on Jeopardy didn’t make him anxious, he’d be worried. I’m starting to feel that way about stocks…

No, not in a “sell everything” kind of way. More like in an “S&P 500 could peel off 200 points pretty quick” way. The chart: 

The S&P 500 has been bouncing along between support at 4,700 (top horizontal red line) and 52-week highs at 4,793 for a month now. 

And the CBOE Volatility Index (VIX) has been floored at 2-year lows since November:

Seems ripe for a sell-off, and I’m looking at 4,600 on the S&P 500 chart above. Notice 4,600 is where the 50-day moving average (purple line) and second level of support (horizontal red line) intersect. 

Ok, that’s it for me this week, have a great weekend and I’ll talk to you next week.

Briton Ryle
Chief Investment Strategist
Pro Trader Today
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