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.