By FXEmpire.com

The Dow Jones Industrial Average had a very quiet session on Wednesday as their simply little in the way of news to push the stock markets in either direction. The average has been trending upwards since early June, and has actually formed a fairly easily identifiable up trending channel.

As the market has rallied significantly over the last couple of weeks, it makes sense that a pullback would be coming. We’re reaching a significant high from a back in May, and we are also at the top of the channel. It is because of this that we expect some type of pullback in the short term, but don’t necessarily expect any type of meltdown. In fact, we think that as we approach the 13,000 level, the Dow Jones index should become relatively bullish if we can find support in that general area. Below there, we also have the bottom of the channel so it looks like this market will get support either way.

More than likely, a large portion of what is driving the markets higher is expectations for quantitative easing by the Federal Reserve. While this is still up for debate, the market certainly suit just to think that it’s coming. With this in mind, looks like that we will continue to gain overall, but a pullback more than likely will simply attract new buyers. You have to remember that we are in the slowest time period of the year, and this is especially true with the stock markets as most large traders are away on holiday.

The September meeting by the Federal Reserve will have to produce some type of easing that the market likes to continue much higher. Personally, we think that the meeting may disappoint, but in till that time. We feel that the market will have a natural inclination to rise over time. With this being said, we are taking positions in the stock markets, but smaller ones and with a bit more caution than per usual. We feel that once the September meeting by the Federal Reserve is out of the way, we will have a much clearer direction for the rest of the year.

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Originally posted here