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FXEmpire | December 1 2012 1:30 EST
By FXEmpire.com
The Dow Jones Industrial Average futures fell initially during the week as we broke down below the 12,800 level. However, we get a nice bounce by the end of the session on Friday, and formed a nice hammer just above the 13,000 level. This level is a significant support and resistance level going back multiple months, because of this we find this as an interesting place to see the supportive hammer. The market seems to be showing its hand, and it believes that we should be going higher.
The market seems to also think that the congressional leaders will find some type of solution to the so-called “fiscal cliff by the end of the year. If that’s the case, then the market certainly should go higher and will more than likely take off. Under that scenario, we think that the market will very easily find the 13,600 level again.
However, if this does not come to pass we could see extreme negativity come back into the marketplace. We have to admit though, that the market does look healthy at least in the short-term. The later we get into the month of December, the more likely we are to see illiquid market conditions take hold. If that’s the case, we could get sentence spikes in volatility that can work in both directions, up and down.
Most analysts out there believe that we will see roughly a 10% gain, or perhaps even more out of the Dow Jones during 2013. While we can’t necessarily predict out that far, it does look like we’re setting up for another run higher. Obviously, headlines will come into play, and will have a great influence on this market though. Because of this, we are very cautious in need to see obvious buy signals in order to go long. The one outlier of course would be the announcement that some type of fiscal deal has been made in Washington DC in order to avoid the fiscal cliff. On a break above the 13,200 level, we think that most resistance will have been overcome.
Click here to read Dow Jones Technical Analysis.
Originally posted here
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