Year End Markets Review

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Markets have been improving as we come near the end of the year.  There are a few factors that could be the reason.  Christmas spending was better than expected.  Real estate sales where better than the previous month.

Many investors are optimistic about the coming months and the markets are reflecting that, but don’t get too comfortable the markets could easily turn back down.

Market Analysis Before New Year

Equities rallied last week almost everywhere in the world, almost giving an upside direction for New Year 2010. There are few important things to note though. I will put my views on the possibility of breakout on upside looking at technical indicators.

Dow Jones Industrial Average:

This most followed index did manage to close above 10500 (weekly closing) which was proving a big resistance so far for almost a month. However, volume does not confirm a breakout but I give it benefit of doubt as last week was short in duration and the day it closed above this level, had half day’s session. However, the daily closing on Dow Futures does not suggest any breakout as the close and high, both were below previous ones. Unless there is clear direction from both the futures as well as index, we should be careful.

S&P 500:

This is the index I follow most and in my opinion its far better to look at S&P 500 chart than that of Dow Jones Industrial Average. The S&P 500 index managed to close higher both on weekly as well as daily time frame. Volume has not confirmed but again this may be due to the shortened week. The S&P 500 Futures has also closed on new year highs both on daily as well as weekly time frame and as of writing this post, it is trading marginally higher near 1123. I guess there can be more upside in coming days.    –more

Related financial markets articles

• Fibonacci 50% Rebound Shows S&P 500 Meeting Strategist Forecast (businessweek.com)
• Gains Overseas, Retail Sales Data Boost Futures (abcnews.go.com)
• Futures higher ahead of housing, confidence data (seattletimes.nwsource.com)