Dow Futures Recover Slightly After China Sell-Off; Could Still Push Lower
Dow Jones futures recovered slightly today and point to a higher open for US markets as China’s markets opened after the Chinese New Year holiday to a massive selloff. The major headline for the weekend was the injection of liquidity into the financial system by the Peoples Bank of China (PBoC) to stave off negative economic effects from the coronavirus outbreak.
On the earnings front, the major headliner will be the earnings report of Google. Market participants and analysts will be watching to if Google can replicate the results of its peers such as Amazon, Tesla and Apple, which all posted better-than-expected earnings with good returns for shareholders as a result.
Uber and Nike are also helping push the Dow higher, as they are up 1.2% and 2% respectively in premarket trades.
Today’s affirmative price action on the Dow Jones futures represents an extension of the bounce of the previous daily candle on the 28195 price support. This support level also tallies with the midline of the pitchfork. Expansion of the rebound in today trading session could make for a retest of the 2 January and 28 January 2020 highs at 28979.
On the flip side, a breakdown of 28195, which could happen if the coronavirus fears reappear or Google’s earnings disappoint the markets, could pave the way for price to target 27373 (5 July 2019 highs and 2 December 2019 low)1 and 26723, in that order.