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New highs for the markets are on the way, according to one Wells Fargo analyst.
The past week has been choppy for stocks, as investors weighed the potential for a September interest rate hike by the Federal Reserve.
"We think this volatility was long overdue, the Fed speak really is an excuse for a lot of people who were sitting on profits in stocks and in bonds to sell," Sameer Samana said Tuesday on CNBC's "Futures Now." "If you look at the Fed, I'm just not sure they said anything all that different. We still don't expect a rate hike in 2016."
Samana believes that the central bank has, for the most part, "tried to avoid surprising the market," and it looks like investors also feel the same given what he has seen.
"If you look at how people are positioned, they are very sensitive to even small moves in the S&P toward the downside," he said. "[They are] widely positioned [long in the S&P], short on the VIX."
In other words, traders also see markets headed to the upside.
Overall, Samana sees the S&P 500 rising to as high as 2,290 by the year's end, meaning that the index would need to surge more than 7 percent from Wednesday's levels. This would take the S&P 500 to an all-time high by the end of 2016.
A sharp stock market pullback is imminent, according to David Rosenberg, chief economist and strategist at Gluskin Sheff.
On Friday, stocks were hammered by fears the Federal Reserve might hike rates sooner than expected, sending the S&P 500 index and the Dow Jones industrial average into a tailspin. According to Rosenberg, there's more trouble ahead.
"You have a perfect storm here if you get something like a Fed rate hike into the next several months," Rosenberg said Thursday on CNBC's "Futures Now. "The problem is that the market is not priced for it. I wouldn't be surprised that we see some kind of repeat as we had towards the end of last year into January-February, which was something close to a 12 percent correction."
Rosenberg, who has been named to the U.S. Institutional Investor All-America All Star Team several times in his career, doesn't think the shake-up can be avoided.
Oil is coming off its best session since early April, but if you're hoping it's signaling higher prices to come, one of Wall Street's most closely followed analysts warns investors should prepare to be bummed out.
"We're setting ourselves up for a triple disappointment," said Tom Kloza of Oil Price Information Service on CNBC's "Futures Now." Crude oil rallied more than 4 percent on Thursday. "The first disappointment comes next week when we get back lots of the crude oil that didn't arrive in the United States because of storms."
The energy analyst continued by noting that he expects nothing of significance to come from Friday's OPEC meeting in Paris. Additionally, Kloza anticipates that U.S. refiners will start to ratchet back production in late-September and October as crude demand wanes.
"It would be tough for me to make a case for crude oil going more than a few dollars a barrel higher than it is right now," explained Kloza. "We're still in that $42 to $50 trading range. When it gets near the lows, it's a buy."
Crude hit a new high of $47.69 on Thursday, its highest level in nearly two weeks back to when the commodity traded as high as $48.46. However, Kloza believes a sell-off could occur because of these potential pitfalls, as well as challenges that come with gaining accurate data on oil levels in the U.S.
"We put too much faith in EIA, particularly in the energy department's weekly numbers," noted Kloza in reference to the U.S. Energy Information Administration.
Kloza feels that the Administration's most recent findings, which indicate a massive drawdown being part of a discernible trend, were flawed due to the fact that the data was based off a holiday weekend compounded with a tropical storm.
"They're behind the curve on some of the information," complained Kloza in reference to the EIA, which is tasked with providing independent analysis of the nation's supply levels and prices for coal, gas and oil. "Their short-term energy report suggests lower North Sea and Russian production in 2017. We see higher. That is certainly a hurdle for the market to overcome down the road."
Crude oil prices won't see $60 anytime soon and in fact might not even get to $50. The fundamental picture for crude tells a story of a commodity that is headed back to the $30s. The current drawdown when analyzed should be credited to the weather rather than an uptick in demand.
Hermine, the storm that first plagued the Caribbean and Florida before moving into the gulf, caused a huge disruption in production and supply. Some estimates had over 25 percent of gulf oil production taken off line and millions of barrels imported from overseas had to wait out the storm before delivering their cargo.
Since production and supply routes have reopened, it's likely that next week's numbers will show a substantial build in supplies. In fact crude oil supplies have built consistently over the last few months and will continue to do so at least until the end of this one.
There has been continued chatter about an OPEC freeze in production which is unlikely to happen when members meet at the end of the month. There is animosity between some OPEC members, namely Saudi Arabia and Iran, and all of them have to pump as much oil as possible to pay the bills. And let's face it, how would any production freeze be verified?
What Russia and OPEC have agreed to is to form a working committee to study the issue –in other words they've agreed to talk more. And if there was a freeze—the world's third largest oil producer (the U.S.) would not be a part of it. A freeze would put OPEC production at about 2 million barrels above its quota, the U.S. is still producing over 8 million barrels per day, Libya and Iraq are producing more and the list goes on.
It's easy to understand that the world produces much more oil than it uses. There is talk of increasing demand, but in the U.S., the economy is growing at below 2 percent, Mario Draghi downgraded growth for the European Union on Thursday and the outlook for China is weaker. Where will the demand come from?
The fourth quarter and the beginning of the first are times of low demand for oil and this year is no different than last: the Fed is promising to raise rates and if it does, it will cause a worrisome drag on the economy—remember last year when the Fed raised rates in December, the dollar spiked and oil fell.
There is more oil being produced today around the world than last year at this time and economies are doing pretty much the same; it's the perfect recipe for oil to trade in the mid 30s before the year is out.
Lastly there are experts who feel the drop in capital expenditures will hurt production—if that is true it's not showing in the numbers as most countries are able to produce even more. We are still a long way from demand overtaking supplies.
Oil's struggles continue and according to one expert, investors shouldn't expect the commodity to break through $55 for a few years.
The problem lies with the oil glut as supply continues to outpace demand. Despite recent optimism around talks between Russia and Saudi Arabia that could result in reduced output, Dennis Gartman, editor of The Gartman Letter, doesn't see the supply issue easing.
Gartman's main focus has been on the oil futures curve, and that the contango has been widening as of late. Contango is the difference between oil contracted for near-term delivery and crude slated for delivery further in the future.
"There will be no freeze of any consequence," Gartman said Tuesday on CNBC's "Futures Now." "The contangos continue to widen, which tells you that there is an abundance of supply in the market. As long as the contangos continue to widen, as crude oil bids for storage, prices are going to head lower."
Even if Russia and Saudi Arabia formally agreed to put a cap on crude production in the future, Gartman sees U.S. oil producers continuing to flood the market.
"It's only the utterly incompetent drillers who can't make money at these prices," said Gartman. "So, the amount of crude oil that's going to come out of the Bakken, out of the Permian, out of Eagle Ford, is just going to be very large."
"The Saudis, the Iranians and the Russians have nothing they can say to us to tell us to stop our own production and we won't," he said.
As a result, Gartman believes that oil's supply concerns mean the commodity's price will be capped.
"The reality is we're going to be stuck for several years between $35 on the low end, and $55 on the high," he said.
Oil was up more than 1 percent midday Wednesday.
After months of churning in a narrow range, the markets could be in store for a very sharp move, according to veteran technician Ralph Acampora.
"I think if you look at the S&P 500 and put a Bollinger Band on it, it's getting very tight," Acampora told CNBC's "Futures Now" on Tuesday. Technicians often look at Bollinger Bands as a measure of volatility in the market — they tend to tighten during periods of low volatility and widen during periods of heightened volatility. The S&P 500 has not seen a 1 percent move in either direction since July 8 — its longest such streak since 2014.
"It's like winding a spring," he added. "This tells me that the move should be pretty dramatic either up or down, and I opt for the up because of the current leadership in technology and financials."
But what makes Acampora even more bullish lies beneath the surface.
"What's really impressive — and I've been looking at charts for 50 years and I've never seen [anything like this] — when the S&P 500 and Dow moved to new all-time highs, it was led by market breadth," said the director of technical analysis for Altaira Capital Partners. "That means the majority of stocks were stronger than the large blue chip averages. I don't think I've ever seen anything like that."
Acampora explained that the outperformance of small and mid-cap stocks lead him to believe that the market is broadening, and that could mean even more new highs in the near future.
"I'm fairly bullish longer term," he added.
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