With the employment report out today you see the basis for relatively benign price action on stocks and oil for the rest of the year. While we have probably seen the bulk of employment gains for the year, the Fed will error on the side of sitting on its hands and trying to figure out if anything can be done by it structurally. Obviously cheap interest rates do not trickle down and yet that is the only tool that they really have used to date. QE2 was a boon to speculation in commodities and stocks but is over and did not give real follow-through to the economy.
Probably the biggest thing the Fed can concentrate on now is to try and influence Congress to cut back the deficit a little. That will have a negative impact on the economy but the effect will be slow.
As such we are looking at the following price ranges for the remainder of the year on the three most important markets that reflect the macro influences: S&P 500, 1185 to 1370; Crude Oil 98 to 115; Gold 1095 to 1577.
More thoughts at 8:15 AM
The S&P 500 and Gold markets are currently trading in the top 25 percentile of our price expectations for the remainder of the year. The price levels to be watched over the coming periods are 1315 on the S&P and 1456 on Gold. When the market breaks through those levels to the downside the next page in this year’s market will unfold.
Oil on the other hand is in the lower 25 percent of our expected range for the remainder of the year. As such a tight sticky range of 98 to 106 should prevail as world supply concerns will be offset by weak demand.