Dow Jones
Dow Jones futures are falling for the second straight day as traders continue watching the performance of the bond market. The index is trading at $31,270, which is 0.40% below yesterday’s close. On the other hand, the fear and greed index has dropped to 52 from last week’s high of 63.
What happened: ADP released relatively weak jobs numbers yesterday, putting more pressure to Congress to act. Still, the reaction was relatively muted as investors wait for the official nonfarm payrolls numbers that will come out tomorrow.
At the same time, there is a possibility that the $1.9 trillion stimulus package will be passed next week. This is after Biden conceded that the $1,400 checks should not go to higher earners. While such a stimulus is positive for the Dow Jones, it also raises the possibility that the economy will overheat, leading to higher interest rates. This is why bonds are hovering at multi-month highs.
Fear and greed index: The recent price action has led to the fear and greed index to drop from last week’s high of 63 to the current 52. The junk bond demand is at the extreme greed zone while the number of stocks at their 52-week high are more than those hitting their lows. The stock market breadth and market volatility have moved to neutral while the safe haven demand, market momentum, and put and call options are at the fear zone.
The Dow Jones index is trading at $31,270 in the futures market. On the daily chart, this price is a few points below the all-time high of $32,015. It is also slightly above the lower line of the ascending trendline and slightly below the 25-day and 15-day moving averages.
Therefore, in the near term, the index could continue dropping as bears target the lower side of the channel. After this, the index will then bounce back and retest its all-time high. However, a further drop below the rising channel will be a bearish signal.
