Stocks may have opened lower for the sixth session in a row, but veteran market watcher Ed Yardeni argues bullish activity in commodities suggests the stock market will break more records.
He says the rise in oil and industrial metal prices is likely to continue — a sign that demand is stimulating economies across the world. As a result, it should give the equities rally more juice.
"I watch commodities very closely," Yardeni Research' president said Tuesday on CNBC's "Futures Now." "They are really, really good at telling us what is going on in the global economy."
West Texas Intermediate crude oil has rallied 21 percent in just the past four months, even though it fell by 1.9 percent to settle at $55.70 a barrel on Tuesday.
"The old adage in the commodity pits is 'the best cure for high commodity prices is high commodity prices'," said Yardeni.
As for industrial metals, Yardeni notes they've been accurately reflecting the improving global economy since 2016, despite some recent, temporary sluggishness.
"It's still sort of Goldilocks for the global economy. It's strong, but not too strong," he said.
Yardeni has been one of Wall Street's most consistent bulls. He turned positive a few days after the S&P 500 hit an intraday low of 666 on March 6, 2009.
"The latest version of the bull case got started late last year, and it wasn't just President Trump winning and the perception we were going to have tax reform, less regulation and tax cuts," said Yardeni. "The global economy started to show more strength, and I think that had a lot to do with earnings turning around and showing better comparisons this year."
On July 27, he told CNBC the S&P 500 could "melt up" 8 percent more by year-end. Since then, the index has risen 4 percent.
Yardeni is taking a somewhat conservative approach for 2018. His price target is 2,600 to 2,700 — about a 1 to 5 percent increase from where the index currently sits.
But it may not stay there.
"I am a happy bull. I am in a position where I can keep raising my targets," Yardeni said.