DJIA Record Highs in Sight After BetterThanExpected Q2 Earnings Season

The Dow’s near-term bias remains to the topside as long as the index holds above the previous breakout level at 26,400.

You’d never guess it amidst the latest headlines that the The We Company (WeWork) may be looking to postpone its highly-anticipated IPO or that job creation in the US is slowing, but major US indices are actually within 2% of their all-time highs.

While there are concerns about a potential slowdown in global growth heading into the end of the year, US corporations continue to thrive. According to the earnings mavens at FactSet, 75% of S&P 500 companies beat their Q2 earnings estimates and 57% of companies have reported better-than-anticipated revenues. While corporate earnings overall declined by -0.7% for the quarter, the decline was smaller than expected as the tailwind from 2018’s big tax cut faded.

After pulling back from record highs in late July, the Dow Jones Industrial Average formed a well-defined, 1,000-point sideways range between 25,400 and 26,400 throughout August. The index has now broken out above that area, completing a healthy correction within this year’s uptrend, and appears poised to retest the all-time high near 27,400. Meanwhile, the RSI indicator has formed a clear near-term uptrend of its own after briefly touching “oversold” territory below 30 last month, signaling that the momentum increasingly favors the bulls:

Source: TradingView,

Moving forward, the Dow’s near-term bias remains to the topside as long as the index holds above the previous breakout level at 26,400. Needless to say, a confirmed breakout above 27,400 would be a sign of strong buying pressure and could open the door for a move above 28,000 in time. Only a break back below 26,400 would shift the near-term bullish bias back to neutral from a technical perspective.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account