Dow Futures are showing a negative price action on Thursday. Till press time, the futures contracts of the Dow Jones Index were changing hands at 33886 points. This meant a drop of 147 points in the Dow Industrial Average. The S&P 500 futures were also down by 30 points today.
On Wednesday, US stocks remained sideways as the markets digested the mixed earnings reports. The strong earnings report from Bank of America gave markets some boost this week. Dow Jones Index started the third trading session lower than its previous close and closed the day 0.23% higher.
Before diving into the Dow Futures price action, let’s have a look at the Dow Jones Industrial Average (DJI). The benchmark index has had a 7.7% surge since its March lows and currently stands at 33,897 points. Technical analysis shows that the index can still go higher as the next resistance lies at the 34,245 level.
This will be a major level for the index to reclaim, as it has resulted in multiple rejections in the past few months. Considering the current market conditions and the hawkish Fed comments, I expect the index to face another rejection from this level.
Dow Jones Index often shows an inverse correlation with the DXY Index. For the past few days, the dollar strength index has had a strong bounce after dropping to fresh yearly lows last week. This has stalled the equities rally as the investors await the next FOMC meeting. In case of another rate hike, DXY Index may surge once again, causing a drop in Dow Futures.
In case of rejection from the current level, the futures of the top US index may retest their 200-day moving average, which lies at 32,663. The 200 MA has already been tested quite a few times, so I’m skeptical of a bounce this time.
I’ll keep sharing my updated price outlook on Dow Jones Index in my free Telegram group, which you’re welcome to join.
This post was last modified on Apr 20, 2023, 11:31 BST 11:31