Oil I'll be Darned!

posted Dec 1, 2014, 10:37 AM by Katie Shook   [ updated Dec 1, 2014, 10:37 AM ]

Here we are at the stretch for 2014.  The markets have but one month left, and the last week of the year can basically be a write-off.  So… can we get to the 2100 mark on the SPX before year end?

Call me crazy, but I still say the answer is yes, EVEN though the energy sector is taking it on the chin.  This whole OPEC/Shale supply glut is an interesting phenomenon.  The (relatively) cheap oil, in many ways, should act as a tax break for consumer.  The logical outcome seems like a higher US stock market.  But then again, there’s the complexity of currency exchange at the same time.  I’m not looking at this thing and trying to over-complicate it though.  The simple reality is that Europe is essentially on the QE bandwagon along with Japan.  The US, therefore, gets the intangible benefit of this.  It’s like QE never ended for us — as foreign currencies drop, we’re the more attractive option — so we still have a bid in the treasury market.  Whoda thunk?

Given the direction things have been headed for as long as we can remember now, the most likely scenario seems to be more of the same.  At least for the last month of the year, it seems likely though brute force of trend persistence that this market can push above the 2100 mark (even if it fails to close above this mark at year’s end).  So I see no reason to deviate from this call at this point.

What I do see, based on the oil markets and futures markets, is a little bit of a negative open for the US markets.  How nasty this gets by the time the market actually opens remains to be seen.  It’s possible we could see some additional consolidation around 2050 again.  More than likely we’ll see a low-volume push higher from these levels if we do get a pull-back though.

As always, a natural disaster or a geopolitical surprise could change things.  But until such a black swan appears, it seems the 2000-2100 range is alive and well.

Now… about that Santa Cause rally…

Weekly Estimated Range

Weekly Estimated Range 12-1-14

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