The Dow Jones Industrial Index rose for the fifth successive session on Monday, rising by 0.3 percent to 40,820 points at the time of writing. With an intraday high of 40,907 points, the index rose to the highest level since August 2, underlining the bullishness in US stocks. This has created an upbeat sentiment that the Index could retest its all-time highs of 41,414 in the near-term. Underlying this is a positive sentiment regarding the impending Fed interest rates cuts. That makes Friday’s speech by Fed Chairman Jerome Powell a key focus point for investors this week. With inflation figures having been on a downward trajectory stretching back to May, Powell is expected to give guidance on the extent of interest rate cuts beginning September.
The Dow’s largest component company by weight, UnitedHealth Group stock, was up by 0.7 percent in the intraday session. McDonalds was the biggest gainer at +3.1 percent, Intel was up by 2.1 percent, while Amgen was at 1.1. Notable losers included Microsoft (-0.1 percent), Apple (-0.7 percent) and CocaCola (-0.2 percent).
Momentum indicators
On the 4-hour chart, the Dow Jones Index is well above the Middle Bollinger Band, signaling bullish control. However, it was previously rejected at the upper Band, and that band has recently intersected with the psychological 41,000-point mark. Therefore, that point could possibly serve as the near-term resistance level. Elsewhere, the Stochastic oscillator is at 98, indicating overbought levels, which could slow down upward advances.
Support and resistance levels
The Dow Jones Index will likely continue to the upside if the action stays above 40,800. In that case, the first resistance could come at 40,900. Stronger bullishness in the markets could result in a momentum to break above that mark and potentially test 41,100 points. On the downside, a move below 40,800 will indicate control by the sellers. With that, the first support could come at 40,708. However, if the sellers extend their control, they could snap that support and invalidate the upside narrative. Also, that could lead to further declines to test 40,610.
