Dow Jones Wavers, Fear and Greed Index at 54 – Santa Rally in Progress

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Dow Jones futures are wavering today as traders worry about the Covid vaccine distribution dilemma and the latest lawsuits by Donald Trump. The index is trading at $29,006, which is below yesterday’s high of $30,052. At the same time, the fear and greed index is at 54, which is a signal that investors are getting greedy.

Dow Jones wavers

The Dow Jones surged yesterday as traders reacted to news that Pfizer had made strong progress on its vaccine. In a statement, the firm said that its vaccine with BioNTech had an efficiency rate of 90%. That news pushed Dow Jones to an all-time high as investors started to price-in a better pace of economic recovery.

The wavering today is mostly because investors are now considering the manufacturing and distribution nightmare that waits the world. Indeed, they believe that it will take months to vaccinate the United States and years to vaccinate the 7 billion people in the world.

The Dow is also wavering as the Trump campaign moves swiftly to challenge the results of last week’s election. In a statement yesterday, Attorney General William Barr said that the campaign had made solid arguments, meaning that the cases could go on. As such, investors have started pricing-in a long legal battle, which will put the US recovery at risk.

Fear and greed index turns green

Meanwhile, the fear and greed index has turned green in a signal that greed has returned. The index is currently at 54, which is a sudden reversal from last week’s extreme fear of 24. Junk bond demand and market momentum have all moved to extreme greed. Put and call options and market volatility have moved to neutral while the stock price breadth, safe-haven demand, and stock price strength have moved to the fear zone.

Fear and greed index

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Dow Jones technical outlook

On the daily chart below, we see that the Dow Jones reached an all-time high of $30,052 yesterday. As it did that, it moved above the pre-crisis high of $29,575. It remains above all moving averages, which is a sign that bulls are still in the driving seat. Also, the current decline is because some buyers are exiting their trades after it reached an all-time high.

Therefore, I suspect that the Dow will continue rallying, with the next level to watch being $31,000. The invalidation point for this trade will be the support at $28,000.

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Dow Jones technical chart

Dow Jones

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