Dow Jones Declines as the Fear & Greed Index Signals Greed

Dow Jones is lagging even after the US central bank maintained a dovish tone. On Wednesday, the Federal Reserve indicated that it was too early to talk about tapering asset purchases. Powell also stated that while the US economy has recovered steadily, it is still uneven and incomplete. As such, the bank will continue with its aggressive monetary policy.

Nasdaq and S&P 500 are also down by 0.28% and 0.08% respectively. This is ahead of the first preliminary numbers of the US Q1 GDP and earnings results from Twitter and Amazon among others.  

At the same time, the fear & greed index remains on the greed side of the spectrum at 61. This is higher than the previous session’s 59. The Junk bond demand, market momentum, and stock price strength are all signaling extreme greed in the market. Market volatility and the safe-haven demand remain neutral, even as the pull and call options signal fear.

Technical Outlook

Dow Jones is lagging despite the Federal Reserve’s dovish tone. On an hourly chart, it is trading below the 25 and 50-day exponential moving averages. At the time of writing, it was down by 0.48% at 33,820.4.

In my view, Dow Jones’ easing will continue in the near term as investors await additional catalysts. Below the support level of 33715, it is likely to drop to 33,600. On the upside, the levels to watch out for are 34,000 and 34,245.

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Dow Jones Chart

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