Alright politicians, looks like you’ve failed us again! In the last hour (writing as of 9 PM on December 20), the Dow futures have dropped to a final low for the night so far, about 300 points below the close at 4 PM. Since then, it has recovered slightly, now down about 190 points from today’s close. It almost feels like the night before the August crash of 2011, when the debt ceiling debate failed. Anyway, with this movement, it’s obvious that the market is ready to relieve its grossly overbought position. Here are the short term major support levels on the Dow for a decline.
At this point, the futures are implying that the Dow will open around 13,100. Of course, until the open, this can change until the opening bell.
So, currently, the market seems to be perched on the minor support around 13,090. The initial spike down at 8:18 PM EST had the market at the first major support level at 13,010, but rebounded quickly. Normally, since corrections take the form of two waves down, and one middle wave of congestion, I would expect 13,010 to be broken, and the market to move down to 12,810.
Yes, I did say correction. Breadth measures and intermarket analysis are showing that the bull market is waning, but certainly not over. Congress is expected to come back into session after Christmas (I believe December 27th?). It seems, from the technicals, that a deal will be passed then, and we’ll see a spring rally. So, don’t get too caught up in the panic.