After testing one-month lows late last week, the Dow Jones 30 was able to establish an upwards move yesterday.
The Dow Jones 30 is expected to open positively via US futures markets results this morning. The index has struggled the past month of trading and tested lows before going into the weekend last Friday. However, buying momentum was evident yesterday and there are signs that investors may be ready to effectively pursue bullish behavior near term.
While plenty of attention was given to the GameStop story last week, US markets have proven that investors remain capable of focusing on the broad equity market and staying positive. Even in the midst of the downturn in the Dow Jones 30 recently, it must be remembered that the index remains within long-term bullish territory. As recently as the 21st of January, the Dow Jones 30 was trading near the 31270.00 juncture.
Early calls this morning are showing that a quick upwards movement will occur on the Dow Jones 30, but traders should be careful not to expect an attempt at new record highs quite yet. It might be more probable that the Dow Jones 30 has to prove it can sustain a couple of days of gains to produce widespread confidence among investors again.
One consideration speculators need to pay attention to is the potential positive news regarding another dose of stimulus from the US government. Make no mistake: the inability of the government to guarantee a stimulus package the past week-and-a-half has created headwinds for the Dow Jones 30 and its major counterparts. Last week’s rather cautious FOMC Statement from the Federal Reserve highlighted the sensitive outlook for the US economy if the government does not act; this warning may have been a method to induce the US Congress into action, and it may have worked because a stimulus bill seems to be a major talking point for both political parties now.
Technically, the Dow Jones 30 appears to have been oversold the past week and Friday’s lows may prove to be a low water mark. Speculators should remain cautious, but buying the Dow Jones 30 and looking for a resumption of a bullish climb looks like an attractive trade. If the index challenges the 30400.00 mark today and punctures this resistance higher, traders may see a fast day of trading be produced and the possibility that bullish sentiment will remain optimistic short term.
Dow Jones 30 Short-Term Outlook:
- Current Resistance: 30400.00
- Current Support: 30300.00
- High Target: 30500.00
- Low Target: 30225.00