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The Dow Jones Industrial Average had another fairly quiet session on Friday as the markets continued hovered just above the 13,100 level. We are currently at the top of a roughly defined uptrend channel, and it makes sense that we would run into a little bit of hesitation at this point. After all, we are near the highs set back in May, and should see resistance above.
The markets are certainly being fueled by speculation that the Federal Reserve is about to begin another round of quantitative easing, and if that does not happen this market falls apart. This is the biggest risk of that we see to the stock markets in the United States rainout. However, we think that there are many levels below that could hold this market up. The most obvious one to us is the 13,000 level, and any supportive candle in that range would have us buying.
As for selling, we would want to see a move below the 12,800 level before we felt comfortable thinking that way. However, after the Federal Reserve's September meeting we could see a "sell on the news" type of move. In fact, we would recommend it being very flat of the stock market going into that meeting which is a few weeks away.