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STOCKS LOOK FOR DIRECTION By WSS Research Team

Carlos Guillen

https://www.wstreet.com/user/register.asp?source=3

After quite a week of trading last week, stocks are at a standstill at the moment, just waiting to see what unravels in Greece and what will be done about the fiscal cliff here at home.

The Greek parliament voted yesterday to approve the nation's 2013 budget that contains steep austerity cuts required for Greece to receive the next installment of a crucial economic bailout. This came after last week, when the Greek Parliament approved the austerity measures needed to obtain the next tranche of funds, amounting to 31.5 billion euros ($40 billion), which it so desperately needs. Despite the austerity budget passing through Parliament relatively successfully, the government faces more hurdles before it has access to the rescue package. All indications are that the European Commission, the European Central Bank, and the International Monetary Fund (A.K.A Troika) have been unable to reach an agreement on the release of the money, and more detail will be provided on their so called "progress report." As it stands, Greece will need to cough up 5 billion euros worth of treasury bill repayments this Friday, which if not paid will likely plunge the country into immediate bankruptcy. However, at the moment it is expected that default will not occur until the Troika report is delivered.

Clearly, investors are continuing to be fearful of the upcoming fiscal cliff, which if left untouched will have the nation as a whole paying more than $600 billion of tax increases and spending cuts that will trigger automatically next year unless Congress acts. So the U.S. economy is walking a tight rope at the moment as it all depends on whether a compromise on the fiscal cliff can be reached. As it stands, there are less than two weeks worth of scheduled work days in the lame duck session to strike a deal on this situation. However, we believe that this will be resolved as no one will be that insane as to allow the economy to plunge into another recession just to prove a point.

Technical Test for the Dow
David Urani

With the market digesting Fiscal Cliff issues and the Greek bailout saga for a while, we've drifted into a bit of a bearish trend and there seems to be a technical aspect to the action. Much ado was made last Wednesday when the markets went through the 200-day moving average, with stocks really accelerating down further when it broke. Now we look to be hitting an even more critical test. The Dow is right at a major support point around 12,750 that must hold. It's been tested several times since last year and those tests have preceded big moves in either direction. A break below this level and you could see the Dow facing little support until 12,500. Conversely, if we hold it would mean an open shot to 13,000. As of mid-day the market looks to have bounced off of it and turned higher.