THE LEAD

Friday belonged to oil, at least on television.

USO jumped 4.3% to $169.53. Brent closed above $116 a barrel, its highest level since June 2022, per the Associated Press. Over the weekend, Houthi forces said they attacked a Saudi airport and oil facilities, per Reuters. Saudi Arabia said Sunday it intercepted more missiles and drones.

This morning some of that heat is coming out. WTI futures are down 2.1% to $101.10, pulling back from near six-month highs, per Reuters. That is normal after a run like Friday's. Crude's trend did not budge. Its CCI climbed from 135 to 175, far above its 14-day average of 79. Posture is 91, the strongest reading on the board.

Stocks did not enjoy the oil spike. The Dow fell 653 points, or 1.2%. The S&P 500 lost 0.5% to 7,624. The Nasdaq Composite slipped 0.2% to 25,955. The 10-year Treasury yield climbed back to 5.00%.

But the move that matters most for this letter was small. UUP rose 0.21% to $28.96. That puts the dollar at 93.6% of its 52-week closing range. Because the Supercycle Score is the inverse of the dollar, it fell from 9 to 6. Three more cents on UUP and the Score drops into Ludicrous Headwind.

The dollar's thread also changed. Its CCI rose from -11 to 0. That is better than Thursday, but still well below its 14-day average of 61. So the thread moves from red to mixed. Not a new uptrend yet. Just a dollar that stopped losing ground.

Gold felt it. GLD fell 0.65% to $366.61. Its CCI dropped from -232 to -267, and its posture sits at 3 out of 100. Silver fell 1.3% to $48.72 and stays red at posture 9. Palladium and platinum stay red too.

Two names held green. Crude is one. Soybeans are the other: SOYB rose 0.56%, and its CCI jumped from -138 to -95, above its average of -109. That flips soybeans from mixed to green.

Copper bounced. CPER gained 1.5% to $39.06, and its CCI climbed from -254 to -136. It is still below its average, so the thread moves from red to mixed. Corn's three-day green streak ended. Its CCI slipped from -119 to -123, and it sits at mixed. Nat gas went the other way. UNG fell 3.1%, and its thread turned red.

The S&P 500's thread stays red. The Nasdaq's CCI ticked up from -160 to -156, enough to move it to mixed.

Richard Dennis taught the Turtles to respect the trend that is working and not argue with the one that isn't. Crude is working. Gold at posture 3 is stretched, but stretched is not the same as turning. We wait for the thread.

MACRO

The Treasury curve at Friday's close: 1-month bills at 4.11%, the 2-year at 4.69%, the 10-year at 5.00% and the 30-year at 5.33%. The 20-year sits a bit higher at 5.37%. The gap between the 2-year and 10-year is 31 basis points. Thursday's bond rally lasted one day. Oil above $100 pushed yields right back up.

This is the Dollar Event week. The Fed's decision lands Wednesday, October 28, at 2:00 PM Eastern, with Chair Warsh's press conference after. The calendar consensus is a hold (medium confidence). Then Thursday at 8:30 AM brings third-quarter GDP and September core PCE, the Fed's favorite inflation gauge. Forecasts call for core PCE at 3.1% year over year, up from 3.0%.

Here is the setup. A Fed that holds while oil sits above $100 is a Fed that is not fighting the inflation that oil brings. That would be soft for the dollar. A Fed that leans hard against $100 oil would be the opposite, and gold at posture 3 would feel it again.

Michael J. Howell of CrossBorder Capital, author of Capital Wars, offers a useful frame for why gold can struggle even in a debasement trend. His current call is that global liquidity is rolling over into 2027, a dated projection, not settled fact. In a slowing liquidity tide, the dollar tends to stay firm and gold has to fight for every inch. That fits this tape. It does not change the long trend he describes, where money keeps getting debased to roll over a growing pile of debt.

POSITIONING

Friday's CFTC Commitment of Traders report covered the week through Tuesday, October 20. It did not catch Friday's oil spike.

Large speculators added to dollar index futures again. Their net long rose from 12,919 contracts to 15,044, a 16% jump, and they are now 65.1% net long. That is at least the third straight weekly add. The crowd is leaning into the dollar right as the Score sits near the floor.

In gold, the same crowd kept trimming. Their net long fell from 207,879 contracts to 199,865, down 3.9%, and they are 86.42% net long. That is a fifth straight week of trimming. The big money has been easing out of gold for over a month, and the price has followed.

Put those two together and you get this board: money moving toward the dollar and away from gold, with oil the one commodity strong enough to ignore it. The next report comes Friday, October 30, at 3:30 PM Eastern. It will cover the Fed week.

FROM THE PORCH

Space Coast Daily's forecast for Brevard this Monday reads like a postcard with a warning label stapled to it: mostly sunny, a high near 81, and wind gusts up to 35. The paper also flagged a high rip current risk for Brevard beaches through Friday.

Anybody who grew up going to the beach at Playalinda learned early that the dangerous water is not the loud water. The loud water is the breakers. Big, white, crashing, impossible to miss. The rip is the flat, dark lane between them. It looks like the one spot on the beach taking the day off. That is exactly why folks from out of town wade right into it.

And the first thing every lifeguard on this coast tells you is the same. Don't fight it. You don't swim straight back at the beach. You swim sideways, along the shore, until it lets go.

Friday's board had both kinds of water. Oil was the breakers. Brent above $116, Saudi headlines, the Dow down 650. All the noise. The dollar was the flat lane. Up two-tenths of a percent. No headline. And it still dragged the Score from 9 to 6.

Coke-TV runs today as "oil tops $116 on Saudi attacks." Pepsi-TV runs it as "Dow sinks 650 as oil bites." Neither one mentions that the calmest number on the screen was the one doing the most work.

Two greens, six reds, and a quiet dollar three cents from Ludicrous. Don't fight it head-on, swim sideways with what's working, and keep your eyes on Wednesday at 2:00. - Brad

Data sources: live front-month futures quotes (about 6:59 to 7:16 AM ET), ETF-proxy and index daily closes for Posture, the Golden Thread and the Score, the Treasury curve, CFTC Commitment of Traders data and the economic calendar, all via Financial Modeling Prep. Market color: index closes, Brent above $116 and the Dow per the Associated Press (Oct. 23); Monday oil moves and the Houthi attacks per Reuters via Yahoo Finance (Oct. 26). Brevard wind and rip current alerts per Space Coast Daily (10/26). Hero photo: Unsplash.

This newsletter is for informational purposes only and does not constitute investment advice. Do your own research and consult a licensed financial professional before making any investment decision.