On a day when the dollar, gold and crude oil all rallied, today one of the greats in the business sent King World News a powerful piece discussing the wild trading in global markets and where we're headed from here.

By Bill Fleckenstein President Of Fleckenstein Capital

March 26 (King World News) – Overnight markets were a sea of red, thanks to the latest developments in the Middle East, this being the closest the world has come to a full-on war between the Sunnis and Shiites. I am referring to the current battle underway between the Saudis and Shia Houthi rebels in Yemen, the latter being a proxy state for Iran. In essence, what we are seeing is the so-called leaders of the Sunnis and Shiites (i.e., Saudi Arabia and Iran, respectively) about as close to open warfare as they ever have been.

Whether this will spiral out of control right here and now I can't say, but eventually I expect it will escalate because these two sects have been trying to kill each other for well over a thousand years, with plenty of other countries — not the least of which being the U.S. — caught in the crossfire. Whatever level of danger there had previously been in the Middle East, it is now higher, until such time (if ever) one side gets the upper hand.

Adding to the macro woes was a horrible pre-announcement on the part of SanDisk, whereby the company had to withdraw its guidance and cancel its investors day. Even though it had given a target for where it thought revenues were going to be, it was quite clear it has no idea what business is going to look like. I have made no secret of the fact that I thought SanDisk was in trouble. Unfortunately, with the tape being so squirrelly I got chased out of my shorts (thank goodness I still have some puts).

King World News - Is This The Greatest Threat To The World?

The Trouble With Short Selling

Investing on the short side has been impossible. You've had to use guerrilla tactics, and when you do that you catch some and you miss some. Fortunately, I managed to catch Intel with a rather big position, which I continue to hold, and I have added some others.

The takeaway from SanDisk is that it saw some problems in the enterprise world, so other companies will be in trouble. Specifically, those that had been looking to see a lot of business show up in the last week or two of the quarter will be especially vulnerable. Thus, I expect to see quite a number of pre-announcements in earnings season, though regretfully I'm not sure exactly who is most likely to get caught, but any big tech company with a lot of international exposure could be in jeopardy.

With that rant out of the way, in today's stock market action the indices lost about 0.75% in the first hour of trading before "macho-ness" took over and the dip was bought aggressively, with market losses nearly eradicated by midday. (Many chip stocks actually turned green as bulls apparently decided that SNDK was company specific.) In the end that rally (sensibly) fizzled and the market closed with a small loss. One of these days an attempt at bravado like we saw today will be crushed and we will know that the decline is getting serious (finally).

Lots of No-Shows at Bond Market Flash Mob

Away from stocks, green paper was stronger. Fixed income, surprisingly, was weak once again (especially the long bond), even with the stock market weakness and the tense geopolitical environment, which nearly always cause people to race into Treasuries. Oil, as you might imagine, was higher, but only by about 2%. I would think if oil were back in a bull market, news like today would have sent it higher by 10% or 15%.

KWN - Swiss Franc Fiasco And Crazy Trading In The Gold And Silver Markets

Metals Quite Strong Overnight As Short-Stops Triggered

Lastly, the precious metals were quite strong overnight, most likely because stops (to cover shorts) were triggered, but by the end of New York trading the gains had been reduced from approximately 2% to 0.5%. ***ALSO JUST RELEASED: Legendary Pierre Lassonde's Shocking Predictions For Gold And Silver CLICK HERE.

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If you are interested in purchasing physical gold and silver for delivery you can call Steve Quayle or his staff at (406)586-4842, or you can email them at info@sqmetals.com

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Eric King