With the surge of the Dow Jones futures yesterday and today, the Fear and Greed Index is showing an uptick, even though extreme fear still dominates the markets. The Dow Jones futures are up 0.3% on the day, adding to yesterday’s 11.02% surge, following the landmark deal between the US Senate and the executive on a $2 trillion stimulus bill.
The Dow Jones futures are presently trading at 20733, having given back some of today’s gains after it had hit as high as 21541. The stimulus package is the largest in history, far surpassing the $800 billion that was approved during the Obama Presidency following the 2008 global financial meltdown.
The Fear and Greed index is used to gauge the sentiment of the majority of unsophisticated traders in the market. The index has ticked up to 13 today, which is a vast improvement after the Fear and Greed Index sank to as low as 3.0 about two weeks ago, indicating the extent of extreme fear that dominated the market. This intense fear now appears to have started lifting, even though it is still present.
The daily candle is now testing the 20398 resistance. Yesterday’s candle closed above this level, but a confirmation of a breakout can only come if today’s candle does the same. Presently, the active daily candle is now pulling back towards this price level as it tests it. If the candle can close above this resistance, then the short-term breakout is confirmed, opening the door towards the 21073 resistance, which is formed by the February 27/May 1 2017 highs. The August 7, 2017 and December 21, 2018 lows at 21636 represent a resistance target that is further north of 21073.
On the flip side, failure to break the 20398 resistance could open the door to further lows at 19978 (December 5, 2016 and March 19, 2020 lows), with the cluster of highs of August 2016 at 18578 lurking underneath. Any price recovery could also present an opportunity to sell on rallies at the appropriate price points, depending on the market sentiment, which at the moment, is very dynamic.