Equity Bulls Should Be Careful What They Wish For
While many people remain exuberant that equity markets seem to be incredibly resilient despite a plethora of social issues around the world (i.e. Hong Kong, South America, etc), trade uncertainty, and deteriorating economic data around the world, investors must be careful what they wish for.
I believe the SPX will eventually reach a level around 3120-3150 before a 7-10% correction with a final near year-end rally with a resultant 3000-3050 finish. What does this have to do with oil? The higher investors and algos push equities up, the higher oil bulls will remain "economically optimistic" and push crude forward.
What this means is we could be setting ourselves up for major issues down the road for consumer goods inflation, compounded with soaring debt levels and a fragile economy, where crude may reach 68-70.00 over the next 10-12 weeks. The end result will be major issues through late 2020. The only thing that will reverse this strong bull forming in crude is a rapid deterioration/escalation in US-China trade talks (i.e. no trade deal, more tariffs, etc).
Once the bulls push crude above 58.00 there will be the potential for some sharper moves forward.
Central banks around the world will also continue cutting rates which will weaken fiat currencies. While this inherently means a weaker economic outlook, until it shows in the equity markets this will remain bullish for crude as a result of weaker fiat currencies.
TP by end of Q1 2020: $68-75.00
TP by Jan 2021: $45 or less
- zSplit
Remember, I focus on investing - not day-trading.
I believe the SPX will eventually reach a level around 3120-3150 before a 7-10% correction with a final near year-end rally with a resultant 3000-3050 finish. What does this have to do with oil? The higher investors and algos push equities up, the higher oil bulls will remain "economically optimistic" and push crude forward.
What this means is we could be setting ourselves up for major issues down the road for consumer goods inflation, compounded with soaring debt levels and a fragile economy, where crude may reach 68-70.00 over the next 10-12 weeks. The end result will be major issues through late 2020. The only thing that will reverse this strong bull forming in crude is a rapid deterioration/escalation in US-China trade talks (i.e. no trade deal, more tariffs, etc).
Once the bulls push crude above 58.00 there will be the potential for some sharper moves forward.
Central banks around the world will also continue cutting rates which will weaken fiat currencies. While this inherently means a weaker economic outlook, until it shows in the equity markets this will remain bullish for crude as a result of weaker fiat currencies.
TP by end of Q1 2020: $68-75.00
TP by Jan 2021: $45 or less
- zSplit
Remember, I focus on investing - not day-trading.
Now that Oil has broken well over 58.00 the door is open to tick towards 62-63.00 as long as trade talks don't completely fall through.
If a phase one deal eventually gets signed sooner than later, oil will likely be 70.00 before Q2 2020 as I stated.