From beginning of November 2012 after election results were out, market is in a steady decline. The uncertainty about Fiscal Cliff is causing the drag on the financial markets. As long as this uncertainty remains, market will continue to drop further. All eyes are on congress and everyone in wait n watch state. But what is this Fiscal Cliff indeed and where is market headed!!! What is this Fiscal Cliff? You may want to read this article to understand US Fiscal Cliff. From below BPNYA chart, it is very clear that we did not get any signal last week. As of now BPNYA remains below EMA(30) and no signs of cross-over suggesting possible trend change. Volatility appears to be rising slowly, however it is contained for now as we do not see any panic selling. Market broke MA(200) support as can be seen from below NYSE daily chart, however we might get a bounce next week. Next week is short week due to thanksgiving holiday and encouraging comments from President Obama last week regarding constructive progress on negotiations might push the market higher. That dos not mean it is start of a new BULL move, instead it might be just a bounce. You can see dotted green and red lines showing possible outcomes. MA(200) line can act as resistance now and market will need some strength to push through. Remember, one more outcome is possible, market may continue to drop further without a bounce but seems less likely. No surprises here, as expected the support trend line is broken on weekly chart. But if market manages to bounce hard then a new BULL trend can be expected here, however expect market to stay near this trend line for couple of weeks before deciding which direction to take. It will all come down to congress decision regarding US Fiscal Cliff and the outcome. What to expect in near term?
What does it mean for our Investments?
Stay cautious and in capital protection mode... Comments are closed.
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