5 market moves to watch Tuesday

Investing


As the dollar closes in on four-month highs and West Texas Intermediate crude takes a pause, here are some moves I’m watching for Tuesday.

1. The dollar index is poised for further gains after an aggressive downside rejection on Thursday. If the December dollar index can settle above 95.05, I expect significant upside. Remember, the fundamental argument for the dollar is a slow and steady march toward genuine tax reform.

2. Gold futures were lower on Tuesday; should the dollar rally further, gold will likely continue its medium-term weakness. Realistically, if gold can’t rally while Saudi Arabia is undergoing a real-life “Game of Thrones,” I’m not sure what is left to provide a tailwind. If the December contract trades down to $1,260, I’ll expect it to plummet to $1,240 quickly.

3. The U.S. 10-year Treasury note yield was lower in Tuesday trading, near 2.31 percent. I see no reason to own bonds during this historic, endless creep higher in stocks with low volatility; 2.8 percent is my medium- to long-term objective.

4. I remain a bull on stocks. I believe the biggest fundamental argument for stocks is impending pro-business tax policy, coupled with low rates. However, I believe that once the details of the tax plan are agreed upon, and its passing is a foregone conclusion, the equity rally will be over in the short- to medium-term.

5. Crude oil is inching closer to my objective of $60 per barrel. I believe we will fill in those last few bucks but may have some trouble beyond this level. The Saudis want crude oil higher, and they’re doing a good job in achieving that end. If the crude oil December contract makes a new daily high of $57.70, I will consider a long position in the commodity.



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