The June low for DJZ was 11,955. The October 5th 4-1/2 year high was 13,599. Today’s low so far is 12,490. A 1,644 pt rally, and we have given back 1,109 points of that rally, or 67.5%.
If 12.500 doesn’t hold, I think we have a panic rush to the exits and we see 12,000 in the next 3 weeks.
Typically, the Fibonacci retracement at 62% took us to 12,581. Those are usually good support areas.
Since this sell off got started, the typical support levels have been as supportive as warm butter. 12,776 (the 50% pullback) held for about 3 days.. It looked like that would attract some support. 300 pts lower we are searching for the bottom.
Tomorrow is Friday. The end of the week. Nothing has changed materially since the Election. In his press conference yesterday, the only thing POTUS was missing was a crown, a robe and a scepter.
If the fiscal cliff remains a political football, where is the carrot for investors to get back into this market?
What substantially changed since the Oct 5th high? Well, that Oct 5th high was 2 days after the Romney first Debate. As time went on, and that momentum fell, so did the market.
From 4-1/2 year high to an 8% correction from those highs. Granted, we had a 13% gain from June to October. Net, Net we are still 5 % higher than where we were in June.
You have to look at the forest and not the trees sometime. If the Government can get over the abyss of hatred which has characterized our political dialogue, then I think we get back on track… Continued intransigence on both sides will create one thing. More uncertainty. Markets, dont’ like uncertainty.
CER
