The SPDR Dow Jones ETF (DIA) recovery has stalled recently. It found a strong resistance at $340, which was about 17.72% above its lowest level in October. This price is the highest it has been since August 19 of this year. The Nasdaq 100 and Russell 2000 recent rallies have also stalled as the fear and greed index remains at 62.
Goldman Sachs warning
The SPDR Dow Jones ETF remained in a tight range as investors continue focusing on the Federal Reserve. Investors are divided about whether the Fed will start its pivot in the coming months. Such a pivot will be bullish for the Dow Jones and other American indices.
Therefore, the ETF will react to the upcoming statements by Fed officials. Those on schedule to speak on Tuesday are Loretta Mester, Esther George, and James Bullard. Their statements will be used to gauge the sentiment of the Federal Reserve.
They will be followed by the upcoming release of Federal Reserve minutes scheduled for Wednesday this week. These minutes will provide more information on the deliberations that happened when the Fed delivered its minutes last month.
The SPDR Dow Jones ETF rally has stalled as the fear and greed index remains stuck at 62, where it has been in the past few days. This means that investors are still greedy for now, with the stock price breadth and depth being at the extreme greed area.
Walt Disney, Walgreens Boots, Coca-Cola, Merck, and Procter & Gamble were the best-performing Dow Jones constituents on Monday. On the other hand, the top laggards were firms like Intel, UnitedHealth, Apple, and Salesforce. In the past 30 days, the top stocks in the DIA ETF have been Boeing, Caterpillar, Honeywell, and Nike.
Meanwhile, analysts at Goldman Sachs warned that the bear market in the stock market is not over yet. They noted that conditions necessary for a rebound like interest rate hikes capitulation and low interest rates have not been met. As such, they expect that the bear market will last through 2023.
“The conditions that are typically consistent with an equity trough have not yet been reached.”
SPDR Dow Jones forecast
The SPDR Dow Jones index has been in a strong bullish trend in the past few weeks. This rally pushed the index close to the important resistance level at $342, which was the highest level on August 16. It has been supported by the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has formed a bearish divergence.
Therefore, at this stage, the outlook of the DIA stock price is neutral. A bullish breakout will only be confirmed if the ETF manages to move above the resistance at $342.6. A drop below the support at $332 will invalidate the bullish view.