Here Comes A January Rally And New All-Time Highs

Stocks took a bit of a punch in the face on Tuesday, but nothing a good night's sleep wouldn't relieve.

Overnight, Iran fired missiles at a couple of American bases in Iraq, hit mostly sand and neither killed nor wounded any American soldiers, according to published reports. If that's the extent of Iranian retaliation for the killing of their top general, it would suggest that Iran's leaders are not stupid and don't want to go to war against the world's most well-equipped military force.

Nobody can blame Iran for not wanting a direct fight with the US military. It would more than likely be a losing battle from the start and end with devastation to much of Iran's infrastructure. Their leaders may have taken the high road by intentionally missing American barracks, showing a calm hand while demonstrating that they can, if need be, meet force with force.

Iran is better equipped to keep doing what they've been doing: supporting splinter groups and terrorist cells without direct involvement in any conflict. In that scenario, they at least afford themselves the opportunity to keep selling their oil to countries who won't respect the US trade sanctions and maybe find their way to a negotiating table to end years of struggle in the region.

Wall Street would likely be amenable to such an arrangement. Some sense of rationality would be a welcome relief to not just the oil market but to the global economies, which have more than their share of worries presently.

If it is indeed the case that hostilities in the Middle East may have reached a turning point, that's all well and good. Any continued sign that the US and Iran are at a safe distance from each other militarily can only be good for the stock market. Such an antecedent would prompt a sharp rally in stocks, which have been somewhat on hold since Christmas and are looking for reasons to break out to new highs.

It being a fresh year, there's plenty of money sloshing around, enough to propel stocks further into the stratosphere.

Unless something terrible happens in the Middle East or elsewhere, expect markets to glide higher and potentially explode though the remaining weeks of January. As everybody in the investment world knows, as January goes, so goes the rest of the year. That's been an accurate guide for about 85% of the time. Another banner year like 2019 may not be in the cards, but it's a near certainty that stocks are poised for another leg higher and continued strong performance.

At the Close, Tuesday, January 7, 2020:
Dow Jones Industrial Average: 28,583.68, -119.70 (-0.42%)
NASDAQ: 9,068.58, -2.88 (-0.03%)
S&P 500: 3,237.18, -9.10 (-0.28%)
NYSE Composite: 13,898.45, -43.35 (-0.31%)