With ‘Fiscal cliff’ all over the news headlines and investors waiting to push the right button when news regarding the upcoming agreement are announced, markets trade near the edge of their ‘cliff’.
S&P is once again testing the green upward sloping trend line as shown in the weekly chart above. Crossing once more the red EMA combined with a break under the green trend line, could generate a selling panic, specially if news regarding the agreement come out negative. I usually don’t expect a piece of news to come out to trade, but in situations like this, it is certain whatever the outcome, volatility is going to rise. If you followed our previous posts regarding S&P, our first alert for bulls was signaled when prices broke the short term upward trend line at 1425.
Dow although had a better and clearer bullish picture than S&P, it did not manage to complete a clear 5 wave move from 12471. As shown above in the weekly chart, prices got rejected at our longer term upper pitchfork resistance. If prices don’t manage to overcome this barrier, then bulls must be ready for a steep decline. Support is found at 12850 and 12750.
If you need help trading these indices don’t hesitate to contact me.As always thank you for taking the time to catch up on my thoughts.
Wishing all a HAPPY NEW YEAR!!!!