Dow Jones is bouncing back today as investors react to an underwhelming Trump rally and bullish calls from key analysts. The index is up by more than 200 points in the futures market. Similarly, the S&P 500 and Nasdaq index have jumped by more than 0.70%. The performance of the US indices is different from what is happening in Europe, where the DAX index has fallen by 0.62% while the FTSE 100 has fallen by 0.25%.
Underwhelming Trump rally raises chances for a Biden win
The Dow Jones is probably reacting to a highly hyped Trump rally held in Tulsa Oklahoma on Saturday. According to media reports, the rally had about 6,200 attendees, which was about a third of the venue’s capacity. Before the rally, the Trump administration had said that more than a million people has applied to attend the rally.
The low performance puts Donald Trump in the defensive in a time when his poll numbers are falling. As a result, it increases risks that the incumbent president will lose the upcoming election to Joe Biden. According to Bloomberg, most financial professionals believe that Biden will be better for US companies. For one, he would not focus on tariffs in his trade negotiations. Also, they believe that he would reduce the chaos that has engulfed the country.
JP Morgan raises targets
The Dow Jones is rising after analysts at JP Morgan raised targets for automakers like General Motors, Ford, Tesla, and Ferrari. In a note, analysts said that new vehicle sales in the United States has been surging in most states. The analysts said:
“We didn’t call it, nor did we expect it, but numerous data points all suggest the U.S. auto industry is in the midst of a once fabled but clearly no longer mythical ‘V-shaped recovery.”
In the statement, the analysts said that they prefer General Motors to Ford because of its broad exposure to China, where sales are rising. Also, they said that they expect the economy to have a V-shaped recovery, which means that the US will have its shortest recession.
The Dow Jones is soaring on a day that coronavirus cases are rising around the world. According to Reuters, the number of new infections in Brazil rose by 55,000 while the US reported more than 35,000 new cases on Sunday. The number of new infections in India rose by more than 15,000. These cases will likely continue to rise, especially in the United States, which has seen large protests in recent years.
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Dow Jones technical outlook
On the daily chart, we see that the Dow Jones declined on Wednesday, Thursday, and Friday last week. The price is also slightly above the 61.8% Fibonacci retracement level. It is also slightly higher than the 50-day and 100-day exponential moving averages. Even with the premarket bounce, there is a likelihood that the price will continue falling as bears attempt to move below the support at $25,241 (61.8% Fib).
On the other hand, a jump above last Tuesday’s high of $26,755 will see the index continue rising. It will mean that there are more bulls in the market, who will want to move to the 78.2% retracement at $27,185.
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