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Dow Jones Forecast: DJI Outlook as the Recovery Fizzles

The Dow Jones index’s strong recovery has stalled even after the strong Nike earnings and pending home sales data. It is trading at $31,438, which is about 5.83% above the lowest level this month. Other Wall Street indices like the S&P 500, Nasdaq 100, and Russel 2000 have all pulled back this week. 

The DJI index is in a consolidation phase after Nike published strong results despite the challenges it faced during the quarter. The company’s revenue rose to $12.23 billion in the fiscal fourth quarter. This was a better reading than the median estimate of $12.06 billion. 

The company was also more profitable than expected. Its earnings per share of 90 cents was better than the expected 81 cents. The firm faced numerous challenges in the quarter such as the lockdowns in China and the strong US dollar. Most importantly, with inflation surging, many shoppers will avoid its discretionary products. This explains why the Nike stock price has pulled back sharply recently. 

The Dow Jones slipped as investors continue expecting that the Fed will hike interest rates in the coming months. Data published on Monday showed that durable goods orders and pending home sales rose last month. This is a sign that the Fed still has more room to hike rates in the coming months. The next key catalyst for the Dow Jones will be the upcoming consumer confidence data. Most importantly, companies like Paychex, McCormick, and General Mills will publish their results.

Dow Jones prediction

In my last article on the Dow, I said that the index had bottomed and that recovery was underway. The four-hour chart shows that the Dow Jones index has been in a strong bearish trend in the past few months. This price action pushed the index to a low of $29,677, which was the lowest level in months. Now, the Dow is crawling back as investors buy the dip.

It has moved above the important resistance level at $30,619, which was the lowest level on May 20th. At the same time, it is between the 25-day and 50-day moving averages while the Stochastic Oscillator has moved to the overbought level. 

I suspect that the Dow Jones will continue rising as bulls target the resistance at $32,326, which was the lowest point in February. A drop below the support at $31,000 will invalidate the bullish view.

Dow Jones

DJI Support and Resistance

The bullish view is in line with InvestingCube’s support and resistance signal. It expects that the index will rise to $32,146 and $32,610. The signal has a success rate of more than 90%, making it one of the best in the industry. 

Dow Jones S&R