April 9, 2025 | Climactic Sell-off For The General Stock Market Nearly Over. Energy Stocks At Bargain Levels. BUY!!!

I will be on this week’s MoneyTalks show with host and friend Victor Adair (Michael is on holiday) The roller coaster markets and specifically the energy sector will be the topics. This should be an interesting conversation that you may want to listen to. Go to MoneyTalks.com.

The tariff war is now on (China now has 125% US levies – resulting in Hong Kong stocks falling 10% – versus 84% on Chinese goods being sold to the US) and stock markets are gyrating with large intra-day swings. Some key currencies like the Chinese Yuan are depreciating quickly and bond yields are rising especially for junk bonds. On a large bounce day (like today on a pause for many countries for 90 days) there is a hope that we have seen the market bottom. When things reverse as they did yesterday fear of a climactic cathartic margin call bottom is forecast. We see one more barfing out of high beta stocks that are still richly priced as still overleveraged hedge funds and speculative retail investors stop buying the dips and instead ‘puke’ out their holdings as they fear more losses. Watch for big down days in Bitcoin, Nvidia, Apple, TESLA, META etc. to tell you that the margin calls are going out fast and furious and indiscriminate selling is occurring to meet the margin calls. So far the indicators are not showing the capitulation seen at historic market bottoms. That is going to occur shortly so be ready to BUY your favourite ideas at bargain prices as others panic out.

Just some of our thoughts on the general stock markets (before today’s recent move on a Trump tariff tweet):

• The Dow Jones Industrials Index peaked at 45,074 in late January 2025 and today is at 37,674. I expect a low to come in the 34,000 – 35,000 area later this month.
• The S&P 500 peaked at 6,147 in mid-February 2025 and is now at 4,985. We see a climactic bottom in the 4,500 to 4,600 area.
• For the NASDAQ the high in 2025 was at 20,100 and it fell to 15,359 today, Downside is to the 13,000 to 13,500 area.

President Trump doesn’t care about the market turmoil and impact on 401 k’s and Trump said “he doesn’t want stocks to go down but sometimes you have to take medicine”. His historic desire to change global trade to America first is disruptive and may take time to resolve but markets discount the worse and then recover. Just remember how markets reacted during Covid in Q1/20.

All of the downside targets are not far away. One or two capitulation days should get us to a historic bottom. This plunge will be one for the history books. An overvalued stock market in love with AI ideas and then a tariff war that led to recessionary conditions and repricing of stocks from perfection down to historic averages.

For the energy sector we have bargain levels right now. Last Friday we got two of our three BUY indicators saying BUY. So that day we sent out an Action Alert with four new investment ideas. Those two indicators were the falling price of crude and the descent of the S&P/TSX Energy Index into our BUY range. On Monday our last indicator the S&P Energy Bullish Percent Index fell to a Table Pounding BUY level below 5% BULLS. At the 2020 low it reached a low of 3.7% Bulls and the upside from there was spectacular for energy investors. Just check your favorite stock charts to see the wonderful upside. Monday the Index fell to 0% – yes 0%. This has only occurred one other time; that of the panic low of 2008. So don’t ignore this opportunity. We have recommended subscribers hold some cash for such a shake-out and we are now recommending that as the Indices plunge to our target lows to put the cash to work in the numerous attractive bargains now seen in energy stocks. We may send out one more SER Action Alert in the coming days if the market action is climactic like at prior major stock market bottoms (1987, 2000, 2008, 2020).

We are holding our Q2/25 quarterly webinar for subscribers on May 1st. The program starts at 7PM MDT and runs for 90 minutes. Subscribers can join the live presentation or listen in the archives thereafter. Given the market duress and the large moves this will prove to be a very important one. I plan to go over what has occurred in the market place and the energy sector specifically and then go into many of the bargains available for purchase. Subscribers will have two Q&A sessions to ask about what they are interested in. Please become a subscriber to join this important market update and energy stocks at bargain levels to consider.

WTI is seeing a lot of hedge and commodity fund liquidation. There is very strong liquidation and the buyers are on strike. Today we are at US$56.23/b for WTI down US$3.35/b. Could we plunge to US$50/b if margin calls are severe – YES. Fundamentally crude is cheap here but with a buyers strike, concern about recession, the two biggest economies (the US and China) in a tariff upping testosterone game of chicken, markets may remain in flux. For long term investors, find the ideas you want to own for this energy (and most commodities) super cycle and put your BUY orders below the market on plunging days to get great bargains for significant appreciation into the end of this decade.

Trade discussions have started with over 50 countries to get some relief from the US imposed tariffs. Japan may see the best chance to get a better deal and this could be a template for other countries to use. This however may take time.

The US economy is showing mixed signs with consumer sentiment declining but payrolls rose in March by 228,000 above the forecast of 140,000. While government jobs are seeing layoffs the private sector saw a rise of 209,000 jobs. This is just what Trump wants to see. The Fed Chairman Powell stated that the Fed was in “no hurry to cut rates amid

Josef Schachter April 9th, 2025

Posted In: Schachter's Eye On Energy

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