Dow Jones set to rally to 13,000pts

The Dow Jones is set to rally to major resistance at 13,000 pts, though I dont find that point very secure footing, and I think it will close the day back at 12,850 pts. The fall to 11,650 pts was rapid, and after some trepidation, I think the rise will be technical trading more than fundamentals, so the move should be completed by the end of next week. In the medium term I see just more consolidation for the next few months.
The upside is presented by corporate reporting suggesting that the market remains resilient. The reality though is that asset prices are falling and costs are rising. Not a recipe for earnings growth. The Fed cut might give people confidence in the short term, but its not going to revive the market for very long. But inflationary pressures will take time to materialise, so I see consolidation in the near-term. The threat of a financial failure remains, likely associated with 'netting out of derivatives contracts'. This was the practice of rogue trader Jérôme Kerviel and I would suggest that the 'options incentive' that permeates dealing desks also extends to senior management. For this reason, in an environment where the 'players are rewarded on the upside' but not penalised on the downside, you are going to see CEOs retiring on their payouts and traders retiring. Who will be holding the broken eggs? Dismayed investors. There is a good chance of financial failures. So where is that likely to take the market? Well certainly back to 11,650 pts. The next support is 10,000 pts. I dont see any evidence for that size drop yet, but there remains a big risk hanging over the market. I suspect there will be 'regulated disclosure' though this period. But that I mean the Fed and other central banks will be in discussions with financial institutions to determine the state of the market. Will there be any surprises?
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Andrew Sheldon www.sheldonthinks.com