July 2020

Dow Jones futures are cautiously higher today as traders react to the surging number of coronavirus cases in the US and the ongoing earnings season. The index is trading at $26,788 as at 10:30 GMT. Other indices, including the S&P 500 and Nasdaq 100, are higher by 0.45% and 1% respectively. The recent rally in stocks has reinvigorated greed in the market as evidenced by the rising fear and greed index. US coronavirus cases jump Earlier this week, investors rejoiced when Moderna revealed that its vaccine had made impeccable progress in dealing with the virus. Other companies like Pfizer and AstraZeneca have made significant progress in their vaccines as well. In another report, Gilead reported that its remdesivir drug had shown positive signs in treating the disease. However, the rising number of cases is sending shivers in the investing market, affecting the Dow Jones. Yesterday, the US reported more than 77,255 new cases, which was the highest number ever recorded. It broke Wednesday’s record of more than 67,000 infections. At the same time, the country confirmed more than 943 deaths yesterday. Therefore, investors believe that the ongoing recovery of the economy, as evidenced by the better retail sales numbersyesterday, will be affected by the disease. Dow Jones reacts to corporate earnings A primary solace for the Dow Jones is that corporate earnings have been relatively strong. Yesterday, upbeat trading revenue helped to offset loan losses at Morgan Stanley. The bank’s FICC segment jumped by more than 100%. The previous day, earnings from Goldman Sachs showed the same thing. Other companies that have reported strong results are Netflix, andJohnson and Johnson. In a report today, Blackrock, the biggest asset manager in the world, reported a 22% jump in profits in the quarter. The revenue rose by 3.7% to $3.65 billion, while assets under management rose to $7.32 trillion. The firm said: “Clients are turning to BlackRock more than ever before as they face increasing uncertainty about the future, and we are bringing together the entirety of our differentiated platform to help them.” Other global companies that reported upbeat results are Volvo, Electrolux, and KONE. In an update to investors, Daimler said that its loss would be smaller than anticipated. Fear and greed index As the Dow Jones index jumps, data from CNN Money shows that greed has returned to the market. The fear and greed index is now at 62, which is considered to be greed. Just a month ago, as shown below, the index was at neutral at 52. This greed is demonstrated by the stock price breadth, which measures the rising volume in the NYSE. The volume has jumped by 11.70% in the past month. Similarly, the stock price index, which measures the number of stocks hitting their 52-week high is at the upper side of the range. The other elements of the fear and greed index are neutral. Fear and greed index Dow Jones technical outlook Dow Jones futures are trading at $26,745. On the daily chart, the price is above the 50-day and 100-day EMAs and the ascending trend line. It is also slightly below the 78.2% Fibonacci retracement level. This retracement connects the highest and lowest levels this year. Therefore, I expect that the upward trend will continue as bulls target the next resistance level at $27,633. On the other hand, a move below $26,000 will invalidate this trend. This is not only an important psychological level but is also along the ascending trend line. Dow Jones Daily Chart