Where will the market be at year end?

The S&P 500, Dow industrials, transports and utilities are all making or have made new highs this past week. Why are so many Americans still anxious and what do the next seven weeks look like for the markets?

A trader works on the floor of the New York Stock Exchange.
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A trader works on the floor of the New York Stock Exchange.

The drop in unemployment to 5.8 percent, a six-year low, moves us closer to full employment. But the number of jobs added fell short and the quality of job growth is suspect. Many of the jobs created tend to be part-time with low wages — not meaningful full-time, well-paying jobs. And wages? They remain stagnant, yet consumer confidence appears to be strengthening.

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Energy costs have fallen — good for the global economy and the global consumer, all while interest rates remain at or near zero here at home, in Europe and Asia. Last week we saw the Bank of Japan launch an "airstrike" — announcing an unexpected stimulus program — helping to send Asian markets and then global markets higher. Anticipation was building that the European Central Bank would make a stealth move — adding to the euphoria. So far, this has not happened. The world awaits the next European Central Bank move. Will they continue to just "talk the talk" or will they "walk the walk?" If ECB chief Mario Draghi drags his feet and the European macro data continues to disappoint, then investors and the markets will soon tire of the rhetoric and begin the process of re-assessing the outlook, which would surely bring pressure to the global markets again.

This week brings retail sales on Friday. If they're weak, then expect to see retailers get out in front of the consumer and start with pre-pre-holiday sales trying to drag the consumer kicking and screaming. However, retail sales aren't likely to dictate where the market is headed.

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Global macro data and Federal Reserve speak will determine year-end action. With no upside resistance at the moment, any push higher could take us to S&P 2100 (psychologically a nice round number) up 3 percent from here rather quickly. Any pullback should see the S&P test at least the 50-day moving average at 1976 — a 2.6-percent move lower.

Expect some short-term volatility as the market churns. By year end, I suspect that we will end up right about where we are today — up 9 percent for the year. This is a call that I made in January — 2014 felt like it was going to be a return to "normalcy" in terms of stock-market returns as the economy settled into a new rhythm. Add in dividends and it's not so bad.

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Commentary by Kenny Polcari, director of NYSE floor operations at O'Neil Securities. He is also a CNBC contributor, often appearing on "Power Lunch." Follow Kenny on Twitter @kennypolcari and visit him at kennypolcari.com.

Disclosure: The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.