State of the Union, Good Points, Modest Numbers

In what may be best described as “President Lays Out Plan for the Nation and Old Angry White Men Slump in their Seats” the President outlined a plan that included targeted tax reductions and modest job creation measures under an umbrella of fiscal restraint.

For investors this is not the stuff for a roaring bull market and on reflection this might be for the best.  It makes me feel better about most of my price projections for the year.  One exception stands out,  Gold,  and probably other precious metals may have a tougher time than I predicted.  There isn’t much inflation baked into the cake outlined.  I say this because while the so called stimulus aspects of the speech were good, the dollars proposed will hardly make the meter move. 

In a broad context what could happen is that the President is buying time that will let the long trend catch up to the market.  In 2007 the asset markets (stocks, housing, etc)  were some 45 percent overdone.  Some of that has peeled off but the game that market has to get through is 2013 and letting the trend catch up is a possibility, although not a high probability.

With some groundwork for the year’s markets now in place it might be time to resurrect the ladder trading concept for the S&P.  We look for the range for the remainder of the year to be 920 to 1120 with a 1020 swing-point.  That makes the 1070 level (a little below yesterdays low) as current support and the 1120 area as resistance for now.