As we begin the final quarter for the year, the markets and the economy is going to face many challenges. Even with the challenges, I feel that investors will be rewarded now that intuitional selling pressure is subsiding, and the market is entering its seasonally strong period.

S&P 500 Index: I believe the S&P can reach the 1230-1250 mark before running into some resistance. If the index breaks above the 1250 mark, it has the ability to reach the 1325-1350.

The question we have to ask ourselves is whether staying in for the grand finale worth it. I think not. When the S&P broke below 1200 recently, it weakened the longer term trend. Since or economy is facing a potential recession square in the eye, I would rather be cautious at the 1250 level on the S&P.

Dow Jones Industrials: Our initial target on the Dow is 10,750. A breakout above this level could carry the index to a euphoric high in the mid 11,000 range. Early next year, the indexes could begin a period of weakness which could carry the market to the 9000-9200 level.

NASDAQ: Since investors have hated this index for so long, it may actually put on a better performance that the S&P and Dow. Near term, I wouldn't be surprised to see a move to the 2200 level, then breakout to 2300-2500.

INTEREST RATES, GOLD, and COMMODITIES: The Fed will continue to raise rates to kill off any inflation remaining from higher energy prices. As energy prices come down, and higher interest rates slow growth, commodity prices will pull back. Since gold is a hedge against inflation, as inflation fears cool, so will the price of gold.