S&P 500
Over the past five weeks, the Dow Jones has consolidated in a relatively tight range of three-thousand points. No matter the daily economic news, good or bad, Dow Jones seems stubborn enough to remain close to its all-time highs.
Unlike Nasdaq 100 that put a new all-time high after the COVID-19 bearish break, Dow Jones was not able to break above the previous highs. Better than expected NFP data, strong comeback in the manufacturing or services sectors, were not enough for a push to new highs.
Unless something extraordinary hits the wires in the months to come, the expectations are that summer trading conditions and the November 2020 US Presidential election will keep Dow Jones in a tight range. Historically, the US market performs worse than average in the months leading to the US elections.
The week ahead lacks first-tier data to markedly influence Dow Jones. Therefore, the focus remains on how the United States handles the coronavirus pandemic, and the risk investors are willing to take ahead of the summer.
Futures point to a -0.23% loss for today, which keeps the Dow Jones into the range.
The 30k is the level to watch on the Dow Jones. Despite the dramatic fall in March 2020 caused by the coronavirus panic, Dow Jones bounced from previous resistance turned into support. It broke higher four years ago with Trump’s victory, and in less than a month in 2020, it gave back all those gains.
Investors with sufficient margin in their trading accounts survived the dip, but many did not, as they were forced to meet margin calls. The 2020 election may prove to be another driver in Dow Jones’s search for new highs. A look at the bigger picture reveals that the 2020 dip did not break the higher lows series, keeping the bullish trend intact.
Therefore, providing there are no negative developments in the fight against the virus, Dow Jones looks poised to wait for the election outcome before making its next move.
