Dow Jones futures are down by almost 50 basis points, erasing the gains made yesterday. The index is trading at $26,717, which is a bit lower than the intraday high of $27,035. The S&P 500 futures are down by 0.40% while Nasdaq futures have jumped by 0.10%. Meanwhile, the fear and greed index is up to 65, which is a sign that greed has returned to the market. Here’s what moving the Dow Jones today.
InvestingCube's S&R Levels
Not in Sell Zone
Investors are reacting to news that senate Republicans are working on a new round of stimulus package to help supercharge the frail US economy. In a statement yesterday, Mitch McConnel, the senate speaker said that he supported a new package to help the economy. He called it a “moral decision.” He said this after meeting with Trump officials at the White House.
The deal comes at a time when the number of coronavirus cases in the United States is rising. Yesterday, the country confirmed more than 57,000 new infections and analysts expect that the number will keep rising. However, some analysts are warning that the $1 trillion package will not be enough. In an interview with CNBC, Mark Zandi, the Chief Economist at Moody’s said that the economy needed about $1.5 trillion. He said:
“It’s got to be probably close to $1.5 trillion in support, at least by my calculation. That means aid to state and local governments, additional support to the folks that are unemployed, another round of stimulus checks and also some more help for getting schools open and helping those health-care workers.”
Corporate earnings put Dow Jones in Focus
The Dow Jones is also wavering ahead of key earnings from the United States. Notable companies that will release their earnings are Microsoft, Tesla, Biogen, Las Vegas Sands, Chipotle, Kinder Morgan, Baker Hughes, and Evercore among others. Analysts expect that Microsoft, which is a member of Dow Jones, will report excellent results especially after the upbeat IBM results.
Most companies in the Dow Jones do most of their businesses abroad. This includes companies like Microsoft, Coca-Cola, and Apple. Therefore, these companies do well when the US dollar is weak.
That is because a weaker USD makes their products affordable to foreign buyers. Today, the US dollar is trading closer to its lowest level this year even as the tensions between the US and China rises.
Fear and greed index
Meanwhile, the fear and greed index, the tool developed by CNN Money shows that investors have become fearful of the economy. Most of the components of index show that this greed is live. For example, the stock price breadth and put and call options point to extreme greed.
At the same time, the junk bond demand, stock price strength, and market momentum are pointing to greed. Safe haven demand and market volatility are neutral.
Therefore, this means that stocks could continue rallying until the fear and greed index turns to extreme greed.
Dow Jones technical forecast
Dow Jones futures are trading at $26,745, which is in the same range it has been in the past few days. The index is above the ascending trend line that is shown in in black. It is also above the 50-day and 100-day exponential moving averages.
Further, it is slightly below the 78.6% Fibonacci retracement level. Therefore, the index could continue rising as bulls target the next resistance at $27,633.
On the flip side, a move below $26,000 will invalidate this trend. This price is an important psychological level that is also along the 50-day and 100-day EMAs.