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Dow Jones Gains On the Day, But US Riots Are Making Investors Nervous

Dow Jones
Dow Jones

The Dow Jones futures are up on the day, but only modestly so as the first major nationwide riots since the black civil liberties demonstrations of the late 60s erupt all across the US over the killing of George Floyd. 

Investors are watching events closely in a day that has seen light volume trading. Unrests are coming against a backdrop of lockdowns and shuttering of businesses across the US. Damage from protests which turned violent leading to the deployment of the police and the National Guard across major cities could add to the economic burden that is being faced by affected municipalities and states. 

Investors are also following the US-China situation very closely. President Trump may have delivered a softer-than-expected package of punitive actions on China, but things are far from cooling off. News from Reuters signifying pending legislation to limit business dealings with entities linked to the Chinese military on the US side, and Bloomberg reports of the Chinese government moving to halt purchases of certain agricultural products from US farmers, is adding to investor caution. 

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Technical Outlook on Dow Jones

The Dow is trading 25418, 84 points or 0.33% lower after bouncing from intraday lows at 15151. Price action is consolidating within the rising wedge pattern. Within this pattern, price is now testing the resistance at 25210. This is where previous lows of 11 March, 13 May 2019 and 6 March 2020 as well as the triple bottom of August 2019, are located. A break of this level is required for the Dow to attain the upper border of this wedge, and possibly make contact with the 26130 resistance level. The 200-day moving average also hangs over this area; it will have to be surpassed for 26273, 27014 and 27373 (previous highs of July 2019 and 11 September 2019) to come into the picture.

Conversely, the fulfilment of the technical expectations of the wedge pattern should see price break down the wedge, which opens the door for the Dow to target 23961 and 23248, in that order. If 23248 gives way, 22253 and 21636 may become relevant as support targets for significant price declines.