Dow Jones Index: CPI/PPI Make a Case for a Drop to 30100

The Dow Jones Industrial Average is struggling to retain its gains for the day after the Producer Price Index data met expectations. Wednesday’s data from the US Bureau of Labor Statistics showed a decline of 0.1% in the headline PPI number, but this represented an uptick from last month’s 0.5% decline. Core PPI rose from 0.2% last month to 0.4%, beating the market consensus of a 0.3% increase. 

InvestingCube's S&R Levels

NAS100

NAS100 (11163.8)

In Buy Zone

STOP

BUY

TP1

11479

TP2

11923

This slight uptick in the PPI for August keeps the Dow Jones Index and other US indices under pressure, as it further strengthens bets for aggressive Fed action when the apex bank meets on 21 September. On Tuesday, the CPI data (core and headline) beat expectations to the upside, sending the Dow Jones Index plunging by 3.91%. 

Additional fundamental triggers for the week come up on Thursday when the Retail Sales data and the Empire State Manufacturing Index numbers will be released. The market consensus is for retail sales to have cooled, reflecting the impact of growing inflation in the US economy. 

Dow Jones Index Forecast

The rejection of the return move at 31282 will open the way for a resumption of the selloff, targeting the next downside pivot at 30627 (20 May 2022 low). A further run to the south below this site where the double bottom of 1/14 July are located will see 30100 become the next harvest point (22 June low). Additional downside targets are found at 29670 (17 June 2022) and 28969 (12 October 2020 high and 13 November 2020 low). 

On the other hand, a break of 31282 opens the lid that serves as the intraday cap. This move makes a push toward 31733 (26 July low) feasible as it represents the next target to the north. 32464 (5 August low and 12 September high) and 33370 (3 June and 10 August highs) are additional upside targets, with the 33,000 psychological price top of 1 August serving as a potential pitstop. 

Dow Jones Index: Daily Chart