The Dow Jones Index (CBOT: YM) demonstrated resilience, posting a second consecutive gain of 0.11% in the latest session, following a 0.35% rise on Tuesday. Positive corporate earnings reports continue to fuel investor optimism. DuPont’s strong results and share buyback program announcement buoyed the index, while upbeat guidance from companies like Spotify and Eli Lilly provided further support.
The 10-year Treasury yield retreated to 4.09% after rising sharply in recent days. This eased concerns about aggressive Fed rate hikes, potentially making stocks more attractive compared to fixed-income alternatives. Also, a significant rally in Chinese blue-chip stocks, attributed to government intervention and increased market support, lifted investor sentiment globally.
However, while hopes for an early Fed rate cut have diminished, ongoing inflationary pressures could prompt further monetary tightening, potentially impacting market sentiment.
Technical
The 4-hour chart shows that the index trades comfortably above the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line), highlighting the prevailing uptrend. The RSI indicator rests above the 50.00 level at 56.20, indicating balanced momentum with a slight upward bias.
Short-term trading opportunities could exist towards the resistance level at the 38,892 price level should the price action sustain a push above the SMAs. A break above the initial resistance could confirm the bullish momentum, likely bringing the 39,100 resistance level into play.
However, short-term trading opportunities could arise towards the initial support at 38,517 should the price action break below the 20-SMA. A break below the 38,517 level would likely bring the 38,285 and 38,098 support levels into play in the short term.
Summary
The Dow Jones Industrial Average is exhibiting bullish momentum, supported by both technical indicators and positive market sentiment. The ascending channel and position above key moving averages suggest further upside potential. Short-term trading opportunities may emerge if the Dow breaks above 38,892, targeting the 39,100 resistance. Conversely, a dip below the 20-SMA at 38,517 could lead to support tests at 38,285 and 38,098.
Sources: TradingView, Trading Economics, Dow Jones Newswire, Reuters.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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