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The Dow Jones had a very quiet session during the Wednesday trading day, as the world awaits the Federal Reserve's announcement today. There is a bit of expectation for the Federal Reserve to engage in more monetary easing, and as such the stock market has gotten quite a bit of a boost. However, we are now at the point where everybody wanted to buy the markets in order to "get ahead of the Fed" has done so.
We are currently at the top of the most recent rains, and a significant high. The fact that we are forming a shooting star at the end of the day on Wednesday does suggest that perhaps there could be a little bit of a pullback coming. This would certainly be true if the Federal Reserve doesn't do "enough" to placate the markets.
If we do fall, we see quite a bit of support below. The 13,200 level is the first area we would expect to see it, followed by the 13,000 level. It isn't until we get below the 13,000 level that we would become concerned for the stock market and New York, as that seems to be a rather supportive area based upon the most recent swing low, and the couple of swing highs during the month of July.
With all this in mind, we do expect to be in a bullish mode for some time. On pullbacks, we are looking to buying this market via the futures market or even blue-chip high dividend paying stocks. There are ETFs that follow this index, and that could be the safest way to play this market as not all companies will be equal obviously. Besides, this is a good way to play directionally, and we think that this is what the market is running on right now, and certainly not earnings of individual companies.
As the Federal Reserve eases more, this means that money flows into the stock markets because of the lack of yield in bonds. This is why we like dividend paying stocks, as does most of the market. With this in mind, buying on dips still seems to be the way to go.