The Dow Jones Industrial Average has fallen more than 600 points in Monday’s trading session as the markets are starting to expect a dismal run of results due to the impact of the coronavirus pandemic. Leading the losers today on the Dow Jones was Caterpillar, which fell 8.58%. Microsoft was 1% lower, while Raytheon Technologies followed closely behind Caterpillar with a 5.5% drop. Caterpillar was downgraded by analysts at Bank of America Securities.
The earnings season kicks off this week, and will feature results of earnings under the coronavirus-driven conditions that companies have been forced to operate in. Markets are expecting a slew of earnings that will fall far below estimates. Watch out for forward guidance provided by companies, as these could be the catalysts for investors’ actions on those stocks.
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Technical Outlook for Dow Jones
The Dow Jones Industrial Average has been rejected at the 23961 resistance line, and is presently challenging support at the 23248 price level. Today’s bearish daily candle presently engulfs that of the previous day. When considered along with the “W” harmonic pattern and the overbought oscillator, traders may need to start considering the possibility of a downward extension of today’s bearish movement. This move would need to see a breakdown of the 23248 price support, and possibly that of 22253 for price to record a leg lower to possible targets at 21636, 21078 and possibly 20038.
Conversely, a bounce from 23248 will put this move in abeyance, and allow price to retest the 23961 resistance. A breach of this resistance opens the door towards further targets at 24922. If price does not reverse at 24922 (127.2% Fibonacci extension from XA and possible butterfly “W” pattern reversal point), then the Dow could aim higher with 26130 being a potential target.
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