OPEC is committed to extending production cuts as the global oil market continues to see inventories fall. While the U.S. oil rig count rose, it plummeted in Canada offsetting the gains. This comes after Morgan Stanley reports that crude stockpiles are, "less visible, as supply in Asia and in floating storage have fallen by 72 million barrels this year."
The stock market will have challenges today to make a record 13 straight higher high with President Trump’s first address to Congress. Also, what could pave the way to a correction are the 4th Quarter GDP at 7:30 A.M., Chicago PMI and Consumer Confidence at 9:00. We will also have API Weekly Energy Stocks at 3:30 P.M.
As we began the month of January it appeared that flooding and wildfires in Argentina would be our dominant stories. However, just as conditions in Argentina started to improve, a new U.S. President was being sworn in. It quickly became clear that the new administration would create far more risk and uncertainty than this year’s South American weather.
After doing some technical analysis on the weekly chart of the S&P 500 futures (attached), it looks like if indeed the S&P 500 maintains its strength over the next several months, we could end up seeing 2350 by the summer. That would be around a 4% rally from here, which does not seem too extreme. Major technical indicators still seem bullish for the S&P 500.