At the time of writing, the Dow Jones 30 future was up by 0.77% on the day as US stock markets were pulled higher by strong European stock markets. The German DAX index had added 1.4% on the day and was trading a mere 0.57% below its August 8 high of 11858. A break to the August 8 high will probably conclude the downtrend that has been plaguing the DAX index since early July and could leave the index in an uptrend. The French CAC 40 index was up by 1.5%.
The situation for the Dow Jones was a bit different, as two days ago the index failed to overtake the August 13 high of 26434, leaving the index short-term bearish and at risk of trading lower.
In the latest hour, China has also threatened to impose sanctions on firms that are due to provide 66 F-16 fighter aircraft and 75 General Electric engines, amongst other military items to Taiwan. China considers Taiwan being part of its territory and is working towards a unification. Dow Jones traders have largely ignored the Chinese comments, but they will be watching any replies by President Trump on the latest development. There are no important economic data reports out this afternoon, however, at 18:00 BST the Federal Reserve is due to publish their minutes from their latest FOMC meeting. At the latest rate meeting, Fed Chair Powell made it clear the Federal Reserve is not embarking on a major easing cycle, and today’s minutes might possibly provide a more nuanced picture. At least, that would be what the markets would hope for as the rates markets are giving it a 98% probability that the Fed will cut rates at the September 18 meeting. If they don’t hint about rates cuts today or in the next few weeks, the Dow Jones might come under pressure once again as the markets are betting on rate cuts.
Technically, the Dow Jones index is trapped between the August 13 high of 26434, and the August 5 low of 25063. As the price is struggling to take out the August 13 high the index might trade lower and reach a level like the 25400 level, before traders might set in and support the index between 25400 and the August low of 25063. Ignoring any short-term price changes, the multi-month trend of the Dow Jones will remain upwards above the June low of 24597.