The Dow has given up 260 points since election day. Is this significant? Probably not, since most of the loss is due to the fact that the fiscal cliff has not been solved. As of today, there has been no progress on the cliff. House speaker John Boehner, who has been upbeat on the outcome, said that Obama needs to lead, rather than announce "a victory lap." The most likely outcome is that currently existing policies will be renewed. Legislators can easily extend the current tax laws as well as hold off on the spending cuts.
What about the market? For me, it's back to the 50% Principle. From its 2009 high of 14,165, the Dow declined to 6547 at its 2009 low, a distance of 7618 points. The halfway or 50% level between 14,165 and 6547 is 10,356 (this is the horizontal blue line on the chart). Following the 2009 ... Log in or subscribe to continue reading.
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