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The Dow Jones had a very quiet session on Tuesday as we are essentially between two major announcements. The Federal Reserve and the European Central Bank are both major influences in the markets currently, and people were simply waiting to see what they will do next.
It should be noted that the core retail sales United States came out twice as strong as expected, but there were a lot of "ifs" and "buts” as far as this report was concerned. Thus giving a minor lift to the markets, but as you can see it was short-lived. The day did finish positively, but rarely so and at the end of the session we still have a lot of questions.
Currently in looks like the 13,300 level is massive resistance, and the 13,100 level is supportive. In fact, we see several support levels going all the way down to 12,600 or so, but we feel that the 13,000 level is a psychologically significant level that should hold as support. Of course, with all of the market participants seemingly interested in some type of new stimulus, if that doesn't, the Federal Reserve all of the support levels will probably give way.
With this in mind, we are simply waiting for some type of pullback in the marketplace in order to go long. It appears that many of the larger traders out there may have already gotten long on the market in anticipation of some Federal Reserve move. As the monetary policy eases, this has traders looking for something to preserve their wealth, which of course won't be bonds in that type of environment. This naturally has of running to the stock markets, and as the US is by far one of the stronger industrialized countries right now, it makes sense that the money flows in the New York indices.
We aren't selling this market, although we do understand that if the wrong headlines come out of the Federal Reserve, it will be time to sell and sell aggressively. In the meantime, we are expecting to see support at 13,000 and are willing to wait for that pullback in which to go long some of the major industrial stocks in the United States.