By David Sterman
NEW YORK ( StreetAuthority) -- At the start of 2012, investors were assessing whether it was wiser to focus on the deep value that many stocks offered, or the incipient signs of a global economic slowdown that would cap any upside for stocks.
They focused on the former in the first quarter, giving stocks a solid boost. But it was the economic headwinds that dominated investor sentiment during the second quarter.
For the rest of the year, you can expect more of the same.The market is likely to focus on still-cheap valuations whenever the global news flow quiets down. Investors will likely shun stocks when the economic seas get rough. Still, it's been an uneventful six months -- at least in terms of unexpected events. Europe remains a mess (what else is new), U.S. corporate profits remain quite robust (no surprise there) and the economy is still in growth mode (though hardly robust). Perhaps the next six months will bring a change and the market will respond to new catalysts. Here are five events that could shape the market's direction well into 2013... 1. Iran blinks and oil hits new lows The Iranian government is in saber-rattling mode again, test-firing a missile to snub any perception of weakness when it comes to negotiating nuclear restrictions. I think it's a bluff, so the recent move back up toward $90 crude oil is a head-fake. Recent reports about Iran imply that economic sanctions have really taken a toll. Inflation is surging and domestic economic activity is shrinking. Another round of sanctions, this time focused on a global boycott of Iranian oil that took root on July 1, promises to deepen the economic distress. That's why Iranian leaders will have to shift course -- sooner rather than later -- and agree to severe restrictions on their nuclear development program. If and when that happens, then look for oil prices to resume their downward slide. Demand for oil remains weak, and here in the United States rising production is starting to take a meaningful bite out of oil imports. This could set the stage for a drop in West Texas Intermediate Crude to $70 or even $60.