Dow Jones Lower As Fear and Greed Index Shows Fear

Summary:
• Dow Jones is mildly lower on a day that the Fear and Greed Index shows market fear, with this week's initial jobless claims figures being expected.

The Dow Jones futures are mildly lower today, trading at 23226 or -0.5% as at the time of writing as investors await this week’s initial jobless claims data. The markets are expecting a slight drop from last week’s number of Americans filing for unemployment benefits for the first time, with a consensus figure of 5000K even as the Fear and Greed Index is at 33, showing fear in the market. Last week, the figure came in at 6648K.

Today’s lukewarm performance follows yesterday’s 600 points increase after US Democratic Presidential hopeful Bernie Sanders dropped out of the race. Sanders has been critical of Wall Street and favours heavier taxes on the rich. His exit provided a knee-jerk tonic that the markets needed to turn focus away from the coronavirus outbreak.

But today brings back the reality into focus. The coronavirus outbreak is still not contained and the optimism with which the week started has started to wane, especially as US President Trump’s expectation to have things going back to normal by Easter have not materialized. Clearly, the Fear and Greed Index’s current value is quite right, showing that retail participation is still not what it was 2 months ago.

Download our Q2 Market Global Market Outlook

Technical Outlook for Dow Jones

The market movers for the Dow continue to be the coronavirus headlines and news releases associated with the fallouts from the pandemic. The Dow was able to shake off the disappointing numbers from last week’s unemployment claims report. The response this time may not be that forgiving if the numbers turn out worse than expected.

The deviation to work with would be 1648K (previous – consensus). Therefore, the Dow Jones futures may respond positively if the number drops below 3352K. This may prompt bullishness on the Dow, which needs a push above 23961 to invalidate the evolving “W” harmonic pattern and target a higher resistance level at 24922.

On the flip side, the markets may selloff if the number approaches 8296K, which means that the “W” pattern may form the reversal point D at the 23248 resistance area. A selloff allows the Dow to target the 22253 and 21636 support levels on the daily chart.

Trading volumes may be lower than normal heading into the Easter weekend and accompanying bank holidays.