Top Story

DJIA testing key level as investors weigh fundamental risks

Earlier today, we highlighted some of the fundamental risks facing equity investors. While we haven’t seen a clear breakdown in the major indices yet, meaning that the trend is still bullish, we can nonetheless map out the key battle grounds and highlight a few levels to watch in the event of a potential breakdown.

  • Out of the major US indices, the Dow Jones Industrial Average (DJIA) has been underperforming already over the past five days or so due, among other things, to the big falls in shares of Boeing. Therefore, if stocks were to go lower, the Dow might lead on the way down as it is already a weaker index relative to the S&P and Nasdaq.
  • Overall, the technical picture still looks bullish. However, the index has tested and reacted from the key resistance area in the 25955-26330 region as highlighted on the chart, below.
  • Over the past three days, the Dow has been testing an intermediate resistance level around 25780 and so far, it has been unable to break above it.
  • Still, with the index holding its own above the 200-day moving average (which still has a positive slope, objectively telling us that the trend is indeed bullish) and above key support levels such as 25220 (which happens to converge with the 200 MA), the buyers remain in control.
  • However, if the 25220 support level were to break down in the coming days, only then things might get more interesting and we could see a more significant correction.

So, at this stage, the Dow is in neutral territory, meaning it could still go up, as it tests key technical resistance levels and as investors weigh fundamental risks facing the markets. The bears therefore may wish to wait for confirmation before stepping in, while the chasing bulls may wish to proceed with extra care given the sharp year-to-date gains.


Source: TradingView and FOREX.com. Please note, this product is not available to US clients

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 Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account