The above graph is line chart of Dow Jone Industrial Average from 1st Nov 2016 till now.
The Dow Jones Index hit an all time high of 19,000 in the last month, crossing over into a hitherto unexplored territory in its 129 year old history. It is still hovering near its high at 19,124 though the momentum seems to have faded yesterday, despite a huge rally in Crude. The OPEC meeting, contrary to market expectations, ended yesterday with a real deal of a production cut of 1.2 million barrels per day, which saw Oil prices rally strongly yesterday. This is usually a strong precursor to the risk on sentiment and while the US bond prices reacted immediately with a sell off, which pushed the Dollar higher, the reaction in the US equities was muted. While December is usually a strong time for the Dow, many experts are predicting that the stock markets have run up too fast on the Trump victory. In addition Trump pronouncements on bringing back industry earnings to be taxed in America as well as cancelling free trade agreements, is negative for equities.
US economic data has been consistently good over the last two weeks showing improvements in housing, jobs, manufacturing, personal income and spending, which makes the December rate hike almost a certainty. However the critical numbers are the manufacturing and the payroll numbers due at the end of the week which could push the Index higher. Some sell off would likely be seen post the FED meeting on December 13-14 but we believe that the Dow will move into the new year stronger rather than weaker.
Technically, any level above 18,000 keeps the Dow in bullish territory and though the thinner trader volumes in December could keep action in a range. Any sustained dip below 18,000 will be bearish for the Index.