Dow Jones

Brief: More Upside for Dow Jones as Fear and Greed Index Clocks to 88

The Dow Jones ended the day above $30,000 for the first time ever. The blue-chip American index has jumped by more than 15% from its October low and by more than 65% from its year-to-date low. The gains are also continuing in the futures market as investors start focusing on the Dow Jones at $40,000. Meanwhile, the closely-watched fear and greed index has risen to 88 which is the highest level this year.

Fear and greed index

US equities, together with crude oil price are soaring because of the recent developments on vaccine and hopes of a smooth transition in the US. Investors have now started to price-in a resurgence of the American economy in 2021 as vaccinated people start traveling again.

In Asia, stocks are mixed, with Nikkei 225 and Hang Seng index soaring by 0.50% and 0.45%, respectively. Elsewhere, in mainland China, however, the Shanghai Composite is down by 0.75% while China A50 has fallen by 0.65%.

In Europe, focus will turn to the United Kingdom, where Rishi Sunak will deliver his autumn budget to the House of Commons. He is set to talk about the economic forecast for the coming year together with his budgetary allocations. Among the potential winners will be schools, the military, and the National Health Service. The FTSE 100 futures are up by 0.35% while in Germany, the DAX index is down by 0.45%.

In currencies, the US dollar index (DXY) is down by 0.10% as traders abandon the greenback for riskier currencies like the South African rand and Turkish lira. Focus today will be on the FOMC minutes for the past meeting, Q3 GDP data, durable goods orders, and new home sales numbers, among others.

In commodities, crude oil price is rallying because of the overall optimism among traders. Gold and silver, on the other hand, have continued to disappoint as investors shift their resources to stocks and cryptocurrencies.

Dow Jones technical outlook

On the four-hour chart, we see that the Dow Jones index rose to a high of $30,200 yesterday. Today, it has pulled back slightly and is now trading at $30,030. The price is above the 25-day moving average and the ascending line that connects the lowest points this month. Now, after breaking-out, I suspect that the index will continue rallying as the Santa rally continues. Read my previous analysis where I predicted that the Dow will soar to $30,750 by end of this year.

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Dow Jones technical chart

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