Dow Jones
Dow Jones futures slide on news that a new variant of the COVID-19 virus was found in the United Kingdom. Since November 3rd, the Dow Jones index and the rest of the U.S. equity market moved in a strong, rising trend, all the way to a new all-time high.
However, the price action in the last days and weeks suggested that the Dow may be at risk of a reversal, as pointed out by the possible rising wedge visible on the daily chart. The fiscal stimulus discussions supported the market on every dip so far in December but bears point out that even a check of $600 represents just that – a temporary help, and it is not a solution for an economy affected by the pandemic.
There are no important economic events this week as the end of the year holidays near. As such, the Dow and the stock market remains sensible to any news regarding the pandemic and the fiscal stimulus expected out of the United States.
The Dow made a new all-time high and closed last Friday on a high note. However, the rising wedge suggests a possible reversal, especially considering the fact that the index already broke the lower edge.
Bears may want to remain on the short side with a stop loss at Friday’s highs and a risk-reward ratio bigger than 1:2 or 1:3.
