The above quote from John Murphy perfectly frames where I believe we are market wise. For example, oil prices zoomed from $12 in 1998-99 to $140 by 2008. Prices spent the next eight years collapsing to $25 in February 2016. Since then prices bounced to the 50s then corrected to $44. As I write Thursday December 27, price touched $60 for West Texas Intermediate this past week.

I suggested yesterday that commodity prices (and stocks tied to them) usually do better in a latter stages of a business cycle as inflation pressures start to build. We may be entering that stage. One of the reasons why investors may be turning toward commodity assets is that they're currently the cheapest in more than half a century relative to stocks.

John Murphy, Chief Market Technician Stockcharts.com

The above quote from John Murphy perfectly frames where I believe we are market wise. For example, oil prices zoomed from $12 in 1998-99 to $140 by 2008. Prices spent the next eight years collapsing to $25 in February 2016. Since then prices bounced to the 50s then corrected to $44. As I write Thursday December 27, price touched $60 for West Texas Intermediate this past week.

Natural gas had a big day Wednesday. It jumped form $2.73 to $2.91. This is probably the start of reversing its downtrend.

The ratio of the Commodity Research Bureau Index to the Standard and Poors recorded a double bottom this year. It is now rising again. The Goldman Sachs Commodity Index (GSCI on the CNBC ticker) is breaking to a new recent high.

Global metals and mining as measured by the PICK ETF just reached a new three-year high. Copper just hit a new recent high at $3.30. The American metals and mining ETF XME just soared from its mid November low at$29.50 to $36.40.

Gold bottomed last December at $1,120. It is now $1,297 and rising. Silver has fallen from $50 in 2011 to $16.76 today. It continues to trend sideways trailing other commodity price moves to the upside.

All of these commodity moves have been confirmed by higher interest rates that would be in the real market, not the FED fairy tale version. The ten-year yield since September has moved form 2.05% to 2.5%, a 25% jump. Again we caution, if you are long dated bonds or bond funds bought in the recent past, you had best exit now. The potential for loss among income investors who have chased yield to the very bottom since the top in yields way back in 1982, is very real, and very large.

Consumer confidence is the highest in 17 years. Therefore the stock market indexes are the highest ever, period. I don’t see a crash coming now. Rather the leadership will change from tech to commodity plays. I would note that the Dow Industrials are a heady 2,750 points above its own 200day moving average.

Okay, now for a look ahead to 2018. No guarantees and we promise to review how we did later in 2018.

There will not be a recession. Stocks will change leadership.

Interest rates are liable to soar far higher than anyone at the FED anticipates. Once rates start up, that market does not look back.

Oil prices are likely to regain the $90 level in 2018. Yep you heard it right here. Emerging markets in the Far East are transitioning from bicycles to motorbikes to automobiles. The demand for energy will sky rocket.

The USA will continue to become an energy exporter. Energy independence will become a reality.

Natural gas becomes the new clean fuel. More trucks will convert from diesel to natural gas.

The Port of Corpus Christi moves from the minors to the major leagues. The 730 mile EPIC pipeline from the Permian Basin to the Port of Corpus Christi will have 590m000 barrels capacity per day. Cheniere Energy plans to complete a liquefied natural gas terminal in Corpus by 2020. The plant will produce 27 million tons per anum MTPA. Couple this will the expanded Panama Canal and Corpus becomes big time.

Bill Cosby’s mistrial occurred before the Harvey Weinstein and Matt Lauer scandals. He will be re-tried April 2. As social mood against such behavior has soared, Cosby is not likely to be so lucky the second time around.

NFL Players have shot themselves in their well-heeled foot. The NFL has cancelled the Sunday Night televised game saying it held little predictive value. Instead there are seven games at 1:00 PM and nine at 4:25 PM. Or, did the NFL want to avoid the photos of empty seats? TV ratings are down 9%.

Finally, Democrats have bet badly hoping the economy tanks and you lose your job. More companies have already announced bonuses thanks to the tax cut. Let’s all thank General John Kelly for bringing order to the White House. Even

Finally Ivanka Trump emerges as behind the scenes deal maker. She gains praise from Bob Corker (the White House is an adult day care center last October) and Susan Collins. Unlike her Father, Ivanka reflected on everyone else who helped pass tax reform. As Reagan observed, it is amazing how much you can get done when you give someone else the credit.