Today was not unexpected for starters. Bears had multiple chances to get this thing headed south and just couldn’t do it. Is it any wonder that the inflationary tactics of the US and others, in a currency war, would do anything other than drive physical assets to the moon? I’d venture to guess that without some of the lingering issues such as war, Euro solvency and Korean conflicts that we might already be looking at 14,000 in the Dow.
For now, though, the bulls are going to win. Today’s action? Some good news drives the dollar down (posted a swing high, by the way) and markets rocket – mostly overnight, and close over the recent channel we’ve been in since 11/15.
So what now? If Euro issues are tabled for now, a healthy market is going to work back down to support and/or consolidate for a while to work off the overbought condition. Then it’s off to test old highs near 1,225. This should coincide with a brief dollar decline as the cycle in the dollar is just about up (4 or 5 more days).
If we break back to 1,175 then game over until 1,140 is reached. However, the higher probability trade right now is to the upside, in my opinion.
Pivots for 12/2:
- R2 -1,227.75
- R1 -1,216.25
- PP – 1,196.25
- S1 – 1,184,75
Trade well and always trade the extremes!