Dow Jones Could Reach 339 Points on Break to Last Week’s High
The Dow Jones is holding up relatively well, despite US manufacturing PMI dropping to 50 from 50.6 in June. The composite that combines the service and manufacturing sector came in at 51.6 from 51.5 in June. It suggests that the annualized growth of the economy is at 1.6%, and far from the strong figures that President Trump would like to see.
The Federal Reserve is anticipated to reduce rates on July 31 to get the economy back on track. Markit also reported that private-sector job creation dropped to a 27-month low and that inflationary pressures remained subdued. Business expectations for the next twelve months dropped to the lowest level since October 2009.
The Dow Jones remains unfaced as it appears that traders are currently pricing in that the economy will hold up. The multi-week trend remains bullish, but in the short-term, the price is trapped between last week’s high and low. We can consider the price been trapped in a rectangle pattern, and on a break to last week’s high of 27388, the price might rise by 339 points to 27731. While a break to last weeks low might send the price lower by the same amount of points to the 26713 level. However, as the overall trend is bullish, I would not trade try to short the Dow Jones index.