Dow Jones futures are experiencing a functional recovery in Wednesday trading after the US market took Joe Biden’s Super Tuesday election wins quite well.
The Fed performed an emergency rate cut earlier in the session, which only served to provide a brief cocaine-like fix to the markets. Markets got dragged down soon after as the big players such as Apple, Amazon and Microsoft all traded lower.
The recovery in the Dow Jones may require much more than just an election win from a candidate viewed by the markets as more liberal than his more revolutionary/populist rival. The coronavirus outbreak is still alive and actively spreading. Today, India has issued visa bans to the travellers from the most affected countries and Australia on the brink of implementing same under nascent biosecurity laws.
The ADP Non-Farm Employment change figure came in at 183K (versus 170K consensus and 219K previous). Therefore, there is not enough deviation to make this news item worth trading, and it certainly did not create any surprise moves on the Dow Jones, which looks towards Thursday’s US ISM Non-manufacturing PMI and Friday’s NFP for further direction.
Read our Best Trading Ideas for 2020.
The Dow Jones futures have gained 2% but are off intraday highs at 26645. Immediate resistance to beat remains 26723, and this has so far held off any attempts at price advance into the 27000 range. However, if the Dow can get some strong impetus for a rise, then a break above 26723 targets the 27014 price level (lows of 28 October – 1 November 2019 and 26 February, as well as highs of the 27 February and 3 March candles). Above this price level, which coincidentally intersects the lower ray of the pitchfork, 27373 comes into play.
On the flip side, re-entry of risk-off sentiment into the market could spur another selloff which targets the support at 26130. The lower barrier of the pitchfork at 25600 corresponds to the 28 August 2019 low, and this may serve as the next support on continuing downside price activity on the Dow Jones Futures.