Dow Resistance Area 12,500 - 12,700

The Dow has gained about 1,100 points since January 22nd's low of around 11,500. This no doubt has been a powerful rally as the builders and the financials have jumped sharply. The area the Dow is in now, between 12,500 and 12,700 is important since this is a support area that had previously held before the markets eventually cratered. However as the index moves up, the previous support becomes an area of resistance. It also makes sense for the Dow to pause in this area of resistance and digest the 1,000 points the Dow has quickly leaped. My thinking is more along the line that this bounce has been a sharp counter trend rally from a much oversold condition. The test will be where the indexes go tomorrow. If the Dow is able to march through this area and approach 13,000 then the bulls may have a fair argument. If not then at the minimum a small pull back is at least warranted. Again, the jury is still out and much will be determined before the open when the employment numbers are released. At a minimum it will likely be interesting, just as the past month has been. That may be the understatement of the year.