Dow Jones
The Dow Jones futures are rising today as traders remain optimistic in the US economy. The futures are up by 158 points and trading at $27,863. Other US futures are also in the green, with the S&P 500 and Nasdaq 100 futures rising by more than 1%. At the same time, the CBOE volatility index (VIX) has spiked while the fear and greed index is at 44, which is a sign that investors are getting afraid.
There are three main factors pushing the Dow Jones higher. First, there are hopes that the United States politicians will reach a stimulus deal in the near term. While the hopes of such a deal have diminished in recent weeks, there is a possibility that the public will put pressure on politicians to do the right thing.
Indeed, the president appear to have softened his stand about the talks. Also, they expect that Jerome Powell and the Federal Reserve will intervene and provide more support.
Second, the Dow Jones is rising ahead of the Federal Reserve releases its minutes for the previous meeting. These minutes will paint a picture about how the members deliberated on the economy and the options that are on the table.
Finally, US equities are rising ahead of the third-quarter earnings season. The season will start on Tuesday, when large banks like JP Morgan, Citigroup, and Goldman Sachs will release their results. Analysts expect that these companies will show some improvement in the third quarter.
Still, there are several key risks in the market today. The biggest risk is that of a report by US congress that recommended breaking-up the biggest technology companies in the world like Amazon, Facebook and Google.
In the meantime, the fear and greed index, which is an important tool developed by CNN Money shows that investors are getting fearful about the market. This is because the safe-haven index has moved to extreme fear. Also, the stock price breadth, stock price strength, and put and call options have moved to the fear zone. The market volatility is at neutral while the market momentum and junk bond demand are in the greed and extreme greed zone.
The four-hour chart shows that the Dow Jones futures are rising today. They are trading at $27,992, which is higher than yesterday’s low of $27,368. That price was along the rising trendline that connects the lowest level on September 25th and October 2nd. Also, the price has managed to move above the 25-day and 15-day exponential moving averages.
Therefore, I suspect that the index will continue rising as bulls aim for the upper side of the channel at ~$28,378. On the flip side, a move below yesterday’s low of $27,368 will invalidate this trend.
