- The Dow Jones Industrial Average seems set to hit all-time highs, but headwinds persist as Disney's layoff plans presents reminder of economic downturn.
The Dow Jones Industrial Average ramped up higher, albeit with muted trade volumes after the Thanksgiving Holiday.
Bullish price action was stifled by news of more layoffs by Disney and the relocation of some of Apple’s non-iPhone related production in China.
According to Disney’s annual filings, the company plans to lay off 32,000 staff in a cost-cutting measure. The company has been one of the hardest hit by the pandemic, as its theme parks remain closed and outdoor entertainment events remain restricted. The company is also cutting down on investments on TV projects and plans to add to the 37,000 furloughed employee count.
Disney’s troubles are a reminder that the US economy is not out of the woods, creating an atmosphere of cautious bullish optimism on the Dow.
Technical Levels to Watch
The uptrend and the evolving ascending triangle on the daily chart give a bias of bullish continuation to the price action. A break of the resistance at 30101 allows the Dow Jones to head into record territory. Possible targets at this time would be the 78.6% Fibonacci extension at 31079, followed by the 32376 mark, where the 100% extension from the swing of 14 May to 2 September occurs.
On the other hand, rejection and pullback that takes the Dow below 29345 could invalidate the bullish break expectation and open the door towards downside targets at 29225 or possibly 28979. Next week’s market fundamentals (including the Non-farm Payrolls report) are vital influences that could decide price direction.
Dow Jones Daily Chart
