We also have a move above 13467 which has helped the momentum indicators move into a “Buy” zone. However the sudden up thrust must continue to keep the pace going into early January.
Statistically the March futures contracts have rallied ten out of ten years from December 12th – January 5th. This seasonal factor if played out this year can help the bulls target 13888 which is the upside Fibonacci 79% level.
So far we are up +8% from the November low of 12724 which should be considered as the Intermediate-term low. If we are in a bullish mode then the index should not need to break this level in the near future.
Of course the Fed’s move could interrupt this and we must remain cautious nevertheless. On this basis we should keep a close eye on 13400 which if violated this week could trigger a sharp downwards move.
The fact that we are also considerably higher than the 20 day moving average may bring some technical traders to think that the market may be overextended in the short term and look to capture profits from the recent gains.
With good job numbers coming in recently and positive expectations for 2008 the markets look poised for another push higher. If we do encounter a pullback, this can be viewed as a healthy move to buy into for year end.
December is one of the strongest performing months of the year and we are all hoping Santa brings his rally sooner rather than later.
Sandy Jadeja is Chief Market Strategist for ODL Markets and founder of www.Spreadbettingtowin.com where he teaches low risk trading strategies and money management.