DOW JONES INDUSTRIAL AVERAGE:

With the Fiscal Cliff issue dominating the markets, the Dow Jones Industrial Average has slipped below the 13,000 level on fears that in case the Fiscal Cliff issue is not addressed by any Congressional deal, the resulting tax increases and spending cuts would push the US economy in to recession.

US stocks ended sharply lower Friday, as negotiations to avert steep spending cuts and tax hikes in the new year showed little progress. The Dow Jones Industrial average fell 158.20 points or 1.21%, to close at 12,938, 62 points below the key psychological mark of 13,000.

James Paulsen, chief investment strategist at Wells Capital Management, said, “It\’s going to be real fluid, tit-for-tat over the weekend. You could tell a lot of people were very skittish about their trades.”

On Sunday night the US senators were racing to hammer out an agreement to avert the fiscal cliff, with tax increases and automatic spending cuts a little more than 24 hours away.

President, Barack Obama said Sunday morning that the financial markets and US economy would suffer in the absence of the deal and asked Congress to act.

There will be an early market close on Monday, New Years Eve. Wall Street resumes trading on Wednesday after the new year’s holiday on Tuesday. Markets are expected to be volatile and completely focused on the Fiscal Cliff deal.

Technical Analysis:

The Dow Jones Industrial Average is showing some weakness with the Index slipping below the 200 day moving Average on Friday. 12,800 is a good support level for the Index. If 12,800 is broken down the next support is at 12,500. The index should be considered to be showing signs of weakness unless it can rally and stay above 13,200 level.

Forecast:

The short term movement in the Dow will be dominated by the Fiscal Cliff news. It is expected that the Congress could get though a last minute deal, which could lead to a smart rally in the Dow Jones.

Economic data releases would be put on a back-burner and will be over-shadowed by the fiscal cliff debate. The market could come under some serious pressure if the fiscal cliff talked are stalled or remain unresolved.

Stocks to watch out for:

Barnes and Nobles (BKS) shares are in the news today and they rose more than 4% Friday after Pearson Plc (PSO) invested more than $89.5 million for a 5% stake in the booksellers Nook Media Unit.

Synchronoss Technologies (SNCR) shares are also in the news today and rose more than 3% after it bought cloud computing unit, Newbay from Research in Motion (RIMM).

Advanced Micro Devices (AMD) shares slipped 4.6%. The stock witnessed intense selling for the entire week and was down more than 12% for the week. There seems to be some news on some insider selling in this stock.

Quicksilver resources shares were down nearly 8%, for a 19% decline for the week with investors growing impatient over the oil and gas production company’s lack of deal for its Hornett and Barn river basin.

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Category: Finances
Keywords: Dow Jones, ASX, Gold, Fiscal cliff, Brent Oil