(MENAFN- Daily Forex)

• The Dow Jones 30 initially tried to shoot higher during the trading session on Wednesday but gave back gains rather quickly as we continue to see a lot of noise.
• This should not be a huge surprise, because we have the Non-Farm Payroll numbers coming later in the week, and that of course is something that will have a major influence on the bond markets, which have a huge knock on effect over in the stock markets.

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Looking at this chart, it doesn't take much imagination to see that we are overbought, especially with the Relative Strength Index being well above the 70 level. That being said, I still think there are plenty of buyers underneath, and it would not surprise me at all to see the Dow Jones 30 turnaround and just simply“chop wood” in this general vicinity in order to work off the excess froth from the shot straight up in the air.

Thursday will probably be somewhat quiet, but I think Friday could set up for significant fireworks. After all, if the job number comes out much different than anticipated, we could see a big move Street Rotating?

There's also the argument that perhaps the“Magnificent 7” have gotten a bit overstretched, as everybody is in the same stocks. That does open up the possibility of other companies being bought into, including the ones on this index. That may be part of what we have seen over the last couple weeks, and then of course these arguments out there for the“Santa Claus rally” continue to echo through the media, because statistically speaking, December normally sees a rather vicious rally. However, it's also worth noting that November has already seen what could potentially had been that rally.

I think at this point you have to look at this through the prism of a buy on the dips type of attitude, even though we are probably overstretched. I'd be very interested in buying the Dow Jones 30 near the 35,700 level, either in the CFD, or perhaps the DIA ETF. I wouldn't over lever this position, because as we get beyond the jobs number on Friday, we start to think about holidays, meaning that volatility could get out of control due to a lack of liquidity.

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