Thursday, December 08, 2011

The Market at a Near-Term Crossroads

The Dow Jones Industrials Average is at a crossroads going into today:

Chart forDow Jones Industrial Average (^DJI)

That right there is the one-year chart for the Dow. A quick look at the chart will show that we are basically right up against the closing high for the Dow from October 28, which incidentally was 12,231 and change. Wednesday's close this week was at 12,196.

If -- and that is still an if -- but if we can close above 12,231 here in the next day or two, then I would estimate there is a 75% chance that we make a run back up to the highs for the year, which would be around the 12,700 level, probably over the next 2-3 weeks. I have made no bones about my longer-term view that the markets are going to be flat to lower for the better part of the next decade, and nothing I've seen over the past year on Wall Street has made me change that view even a little bit. But, this is just one of those times on the short-term chart where we are sitting poised right up against a very clear top of a very clear short-term trading range. But based on the DJIA'a closing highs, today could be a real inflection point for the markets. If we close above 12,231, another 400-500 points on the Dow seems fairly likely to me in December before we probably top out back around the year's highs. But if this proves to be another near-term top, and we cannot hold the 12,200 range over the next couple of sessions, then I would guess we will probably drop again and end the year somewhere in the mid 11,000's range.

I've got my eyes on a couple of stock options and a couple of leveraged ETFs for a short-term play in one direction or the other right now, but I need to wait a day or two here and see which way the market seems to be going in the near-term from a technical perspective. With options expiring in just a week and a day for December, there could definitely be an opportunity for some nice profits in either direction at relatively cheap prices, depending on the action in the market today, and maybe on Friday as well if Thursday proves not to see much movement in either direction.

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Blogger Pseudo_Doctor said...

had been crushing TNA,TZA, FAZ, and FAS over the past three weeks except just got caught at 42.15 on TNA this afternoon in afterhours. Euro just failed the summit pretty much and EURO/USD tanking..time to say goodbye tomorrow baring a miracle

11:14 AM  
Blogger Pseudo_Doctor said...

wow make that nevermind..look how fast time flies deal with 23 countries through ECB maybe not screwed

11:16 AM  
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7:18 PM  
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