Iran War Widens

7/31/2026 The War Spreads Later versions of the Hydra story add a regeneration feature to the monster: for every head chopped off, the Hydra would regrow two heads. Lernaean Hydra or Hydra of Lerna Nolan’s Odyssey is the current movie hit so why not a Greek Mythology reference? The Hydra would re-grow two heads when one head was removed, and that is just what is happening in the Iran ‘conflict’ aka Epic Fury. Iran is attacking Kuwait with hundreds of missiles and drones. No wonder, the US is using it as a base for soldiers and weapons used in the conflict. Egypt confirms the port of Damietta on the Mediterranean was hit by a drone strike July 2. Two LNG tankers were struck. Dubai, home to 3.6 million, has been hit by Iranian missiles. Yes the LTHAAD and Patriot defense system caught them but the resulting debris still fell in the area. Iran’s message is to urge these countries to lobby the US to cease operations. As outlined here last week, the price of oil reached $120 and then fell back to $78. It is correcting sideways. Share of energy and service companies are now trading above that downtrend line from $120. Our floor of $78 was tested and held this last week. Today Friday, WTIC has traded from $81.06 to $86.45, now at $84.26 as I write. How to play this as investors? I don’t think big money will be made buying Exxon Mobil XOM at $154 or Chevron CVX at $195. Energy service stocks are a derivative of bullish energy activity. Those offer a potential better return. Examples include Patterson PTEN, Transocean RIG, and Halliburton HAL. Patterson is trading around book value. Its net income is moving to positive and rigs are utilized. It advanced 4.77% just today. Transocean is trading at 67% of book value. It is the largest offshore driller in the world. It pulled back from $7.50 to $5.00. Like so many energy plays it is trading sideways in a correction. Schlumberger jumped on better earnings, but HAL is still orphaned at $31.95. Buying on dips is advisable. Digital plays are only for the daring now. Microsoft just jumped from $395 to $465 in two days setting a record for billions gained in that time frame. Glad you bought it. Amazon AMZN dropped from $270 to $230 and today rebounded to $270, go figure. Fast trading algorithm trading gives results like this, not a game for the individual investor. The ten-year Treasury note yielded 4.16% in January. It jumped today to 4.73%. This has picked up the advance in rates from the 39-year low of .5% in March, 2020. When asked by Maria Bartiromo about that, Kevin Hassett, Director of WH National Economic Council, replied that Artificial Intelligence would tamp down rates. That was surely the worst quote of the week. I am long TBF, higher rates ahead, and other energy service plays.

Energy Update

7/30/2026 As I say, summer never fails to entertain. After a 1,000 point drop in Indu, it rebounded 613 today. but really still below the recent highs of July 7. NDX and SOX bounced today, expected, still in a downtrend. Crude oil is holding around $84 for WTIC. Patterson PTEN had a nice jump today on improved results in their 8K. I am watching Halliburton HAL. At $120 oil it as $43, today 31.64, this is ridiculous when oil is $84, one of the premier energy service stocks trading this low. SLB had an 11% jump last week but it has corrected back to where it was around $48. The positive results for PTEN should bode well for other energy service providers, hence the interest in HAL. RIG at 45.08 is in the same category selling below book value, my energy service page of stocks is ligting green. Trump is the classic example of a guy how makes money, well I guess he has in real estate, and thinks that success translates to every other field. Hence after snatching Maduro, he thinks he can re make one of the oldest civilizations on the planet to his liking, not going to happen. My bet is that Iran will coninue to bargain their way to higher oil prices, That Trump is publicly cursing, not Presidential DJT, shows Iran is winning the mental and physical game of higher oil prices. Newspaper article tomorrow.

Movie Producer Jason Cloth Indicted for Fraud

7/30/2026

Hmm, Was that A Bear I Saw Today?

Wednesday 7/29/2026 The INDU declined 1m153 points or 2.19% today. The INDU has been holding up as investors, read gamblers, shifted from the now out of favor SOX NDX and Mag 7 stocks to the more run of th emill INDU 30 which does not contain the condentration of tech stocks. the June 10 low was 49,920, call it 50,000. We need to see previous lows like that taken out to have more assurance the top is FINALLY in. Stock indexes ralled late in the day and then on FED no cut news fell to lows of the day. SOX semi-conductors has fallen out of its sort of head and shoulders pattern. Ditto for the Mag 7 stocks. IF NDX contines to respect its June 7 high, we will have moe confirmation of a top in stocks. Okay I am edging back to the bear camp for stock market in general. Recall we have HDGE for INDE, SH for SPX, PSQ for NDX and RWM for Russell 2000. Back in 2009 the NDX was actually under 2,500, today it closed at 27,192, the potential for loss is as large as dot.com 2002 or sub-prime March 2009. the 200 month moving average for the INDU is 25,1841, or about 50%, a fibonacci number, of where the INDU is today. As we have not been to the 200 month MA since 2009, this seems a reasonable eventual target. Why you ask? Margin debt is 50% higher than in 2000, height of the dot.com mania. All those leveraged trades will be unwound. Margin debt in brokerage accounts is 6.5x to cash, there will be a scramble out of that borrowed money. Far more margin exists in leveraged ETFs including so called income funds like municipal bonds and REITs, sold as safe investments. And there are all sorts of leveraged funds like the latest on Spacex, and various indexes. Actor William DeVane is a spokesperson on TV for a metals firm. As he puts it, there have only been two times when the Federal Budget was more than the GDP< WW II and now. Worse those borrowing costs are rising. I have noted that the ten year note was 3.95% February 28 when teh fighting started, now it is 4.6%. The FED left rates unchanged but the bond market has not, see previous sentence. right on cue, Iran refused whatever deal has been floated and oil jumped $5, right at the $78 WTIC level. Again higher interest rates and higher eergy prices were features of the 1973-74 melt down. Still working to get chart display back, patience. I hope you are finding this information of value dennis.elam@att.net

First Brands BK Analysis

7/27/2026 https://outlook.cloud.microsoft/mail/inbox/id/AAQkAGE5ZDc1MzhhLTU5OWQtNDE3Ni1iMjhjLTY3ZjJhNGNiMzRhNQAQALf9dtG7T0VDnuSOhzPTjdU%3D

Stock Rally Relaxes as does Oil

7/27/2026 I watched the Big Short, movie, on Aamazon Prime this weekend. It is the story of how Michael Burry identified weak mortgages, his group created CDOs Collateralized Debt Obligations to short mortgages. I am amazed something this financially complex made it to the Big Screen but it did, worth a watch. Now comes Dr. Burry's, he is a MD of all things, positions today. Comments (126) "The Big Short" investor Michael Burry disclosed a round of portfolio changes on Substack on Friday, deepening several short bets while expanding select long holdings. Michael Burry added to his bearish bets on Micron (MU), Nvidia (NVDA), and other semiconductor names. Burry said in a Substack post that he "sold short" more shares of Micron Technology (MU) at $933.86 and added to his Nvidia (NVDA) short at $210.28, Stocktwits reported. The 'Big Short' investor also increased his exposure to Flutter (FLUT) and DraftKings (DKNG). His existing bearish positions in Tesla (TSLA) and Palantir (PLTR) remain in place. Burry said he has not covered his short position in Tesla (TSLA), adding that it "gets smaller all on its own." Additionally, Burry also "sold short more" Caterpillar (CAT) at $893.49 and added to his short position in the iShares Semiconductor ETF (SOXX) at $535.83. He said the SOXX position, together with his puts, represents a large position. I don't know when he initiated his short in SOXX but that is essentially what is holding up the market. __________________ Stock Indexes NDX SOX jumped sold off and then recovered later today. Oil dropped $7.57 to end the ay thought energy and service were not hurt as badly as I would have thought. The cessation of bombing of Iran by US does mean the US is out of targets and weapons despite, as usual, what Trump says. And the Houthis are still holding htings up on the south side of the Red Sea. Iran took it all and like that old Timex ad, is still ticking. Oil and energy stocks appear to be undergoing consolidation which may well take through August. That's it for Monday.

Energy Stocks Will Now correct a Bit

Energy and energy service have had a great run into Brent $100. Looks like they need to coalesce around their moving averages a at somewhat lower prices. Wall Street is re-thinkingits mad dash in to AI spending see the weekend WSJ. It is always so, the street jumps al over the latest idea, dot.com, sub-orime, and then buyer's remorse. while the OEX index is selling off we need to see closes under the April lows to get excited about a stock market top. As mentioned the bond market has jumped from 3.9% to 4.6% on the ten year T note since Feb 28. I have emphasized the impprtance of the March 2020 39 year low, and rates have soared since then. Eventually this will be the problem for stocks. Federal interest alone is more than the defense budget, is anyone worried? Lead WSJ editorial this weekend decries Trump's tariff obession yet again even finding some 1930 Smoot Hawley legisilation to aid him. That 1930 tariff act prolonged the Depression. It was opposed by economists then as Trum['s tariffs are now. Apparently he does not remember April 2025 Liberation Day and the stock market meltdown. So here we are, summer still, again I am not sure there will be much clarity until after Labor Day.