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What 2013 Could Bring for Gold, Apple, Bank of America, and More

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From T3's Scott Redler, some key predictions about next year's markets.

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FISCAL CLIFF AND DEBT CEILING

As far as the fiscal cliff goes, I feel it is inevitable now that we are going over it. Politico is reporting that House Speaker John Boehner believes the "real deadline" is February or March, when the debt ceiling issues will rear its ugly head again. Republicans are keeping the debt ceiling as a bargaining chip in the budget negotiations. Going over the cliff for a short period of time would not necessarily be a disaster economically, but it may startle the market. Going over the cliff also would buy Washington more time to tackle the debt ceiling once again.

In fact, I think the market may prefer a comprehensive "grand bargain" be reached in January rather than have an imperfect Band-Aid deal be pushed through by Monday. If we go over the cliff before climbing back on it, it will get rid of the perception that Republicans are "raising taxes," which is a characterization they want to avoid. The House will also vote whether to re-elect Boehner as Speaker on January 3. Boehner saw his authority undermined when his "Plan B" bill couldn't muster enough support from ostensibly rank-and-file Republicans in the House, but his re-election could embolden him to get a deal done.

The most concerning aspect of this whole fiasco is the poisonous climate in Washington. Our electorate is more polarized than ever, and it is getting in the way of meaningful progress that this country desperately needs right now. From a trading perspective, it appears we could be set for this same type of headline-driven, choppy action through the first one to three months of 2013.

TECHNICAL OUTLOOK FOR 2013

From a technical perspective, a break and close above 1450 opens the door for a move back to the September highs of 1474. A break and close above those highs opens the door for a move back to 1540-1576 in the first half of 2013.

We also have to prepare for the other side of the coin, especially after Friday's weak close. We have been outlining 1395 as key support that will need to hold to keep bullish composure intact for the beginning of 2013, and we closed below that level on Friday. IBD has put the market in "correction," which is further confirmation of the bearish conditions. The November lows of 1343 could come into play if Washington takes us over the cliff and shows the world once again how dysfunctional our political system is. In a period of history devoid of consensus, I think most of us can at least agree on the fact that Washington needs fixing.

I think if we do plunge based on those political factors, it could create a very exciting buying opportunity akin to what we saw after the debt ceiling debacle the first time around. In 2012, we got tremendous buying opportunities on the October 4 reversal low and the June 4 reversal low, and I believe we can get that type of buying opportunity if we get more weakness in early 2013.
Scott Redler is long BAC, YHOO. Short SPY.
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