World Markets Will Benefit From Fiscal Deal:

Fiscal Deal has made all the major United States indices to go up by around 4 percent in the past 2 days. The Dow Jones is trading at its important resistance level of 13500 and that, quite clearly, seems to break.

The next important resistance level for the Dow Jones would be at the 13750 level which is a near term resistance level and the long term resistance as well as its life time highs stand at 14000 level. This level must be watched quite carefully and the markets are having high probability to cross that level.

The Fiscal deal was proposed by the President of United States, Barack Obama and he said that tax limits should be raised on wealthy Americans, whereas taxes should be as they were for middle class and the poor. This would generate higher revenue for the government and that would drive the economy higher.

Sam Stovall, chief equity strategist at S&P Capital IQ, said, “I think investors are saying, \’I can at least push this market up to recovery highs, but I still want to wait and see what actually transpires before I push it to all-time highs.”

The Republicans and the president also talked about reducing the unemployment figure. ‘Jobless claims’ is another one where these guys would be putting some interest on. They intend to reduce the jobless claims figure by the next 2 years. Earnings will also have some impact by this approval of the Fiscal deal.

Most of the companies and sectors will benefit from this deal, the most being banks and energy companies. Healthcare companies would also benefit from this deal. Most of these companies rose more than 5 percent in these two days after the deal was announced.

About the deal, Greg Valliere, chief political strategist at Potomac Research Group, said, “While the markets and most taxpayers may breathe a sigh of relief for a few days, excuse us for not celebrating. We have consistently warned that the next brawl represents a far greater threat to the markets – talk of default will grow by February, accompanied by concerns over a credit rating downgrade.”

Many analysts feel that this year, equities would do great as most of them are trading at their important support levels and it seems that this deal will help them break out.

Dennis Gartman, The Gartman Letter writer and editor, said, “The trade for the year is to be long gold and equities. Gold is simply another currency. I wish to own gold and am long gold in euro and yen terms.” This analyst feels that this year belongs to gold and equities.

He feels that gold will move out from its long term consolidation and will trade higher. He also added, “I don\’t see any contradiction in being bullish on both gold and equities because it is predicated on the monetary authorities being aggressive in the expansion of reserves. Under those circumstances, gold and equities will both go higher.”

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Category: Finances
Keywords: Chinese Data, Fiscal Deal, Barack Obama, Manufacturing Data, Revival, Chinese economy, Sectors