The Dow Jones 30 has seen a bit of stabilization over the last 36 hours, as we are trying to turn things around after the initial drop on Tuesday. This is a market where interest rate cuts could continue to push the price higher and higher over the longer term.
The Dow Jones 30 rallied slightly in the early hours of Thursday, as we continue to see a lot of noisy trading. That being said, the question then becomes, can we bounce in order to overtake that little bit of a panic session that we had on Tuesday. At this point in time, I don’t know, but I do recognize that we are in a longer term uptrend anyway.
So, I’m not necessarily interested in shorting this market. If we do, in fact, see a bunch of interest rate cuts, and perhaps even stimulus after that there is a high likelihood that the companies in the Dow Jones 30 will be major beneficiaries of this, so it does make a certain amount of sense that the Dow Jones 30 has been strong for some time. If we do break down from here, I think that the 40,000 level would be obvious support, but we also have the 50-day EMA near the 40,350 level that could offer support as well. Breaking above the 41,700 level could open up a much bigger move.
And quite frankly, I think that does happen given enough time, but right now we are trying to work off a lot of the excess froth from the shot higher. Really, at this point, I don’t have a scenario in which I’m shorting the indices, unless, of course, maybe the Federal Reserve starts hiking interest rates, which there’s about a 0% chance of that happening. So with that being said, you have to simply follow the momentum and look for buying opportunities.
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Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.