Is the Santa Claus Rally Over for the Dow Jones?

Summary:
• After setting one record high after another, the Dow Jones incurred its biggest loss yesterday since December 3. Is the Santa Claus rally over?

The US’ blue chip stock index closed 183.1 points or 0.64% lower in yesterday’s trading at 28,462.1. Meanwhile, Dow Jones CFDs were down 212.6 points from their intraday highs at 28,672.6 to 28,460.0.

Only One Stock on the Dow Jones Finish in the Green

Out of the thirty listed stocks tracked by the Dow Jones, only Apple finished in the green. By the end of the New York session, the tech company was up 0.59%.

On the other hand, losses were led by IBM which was down by 1.82%. Disney was the second biggest loser with a 1.36% loss. Meanwhile, Proctor & Gamble came in third with a -1.28% finish for the day.

Profit-Taking Overshadow Positive US Data

It would seem that most equity investors already wrapped up their year and booked their profits ahead of 2020. Not even positive data from the US could keep them from re-balancing their portfolios. Yesterday, it was reported that the Chicago PMI for December was at 48.9. This figure was higher than the 48.2 forecast. On the other hand, pending home sales fell short of the market’s 1.5% forecast when it printed at 1.2% for November. It’s worth noting that the reading for October was upwardly revised to -1.3% from -1.7%.

Consumer Confidence Due Today

For today, the Conference Board will release its consumer confidence report for November. It is eyed to print at 128.0. A better-than-expected reading could provide the Dow Jones with support as it would affirm the Fed’s confidence in the economy.

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Dow Jones Outlook

On the hourly time frame of Dow Jones CFDs, we can see that the stock index bounced off support at the 200 SMA yesterday. Drawing the Fibonacci retracement tool from Friday’s high to yesterday’s low, we can see that the Dow Jones could pair some of its losses back to the 50% Fib level. This price, around 28,587.6, also coincides with the 100 SMA. Reversal candles at this level could mean that sellers are priming for a move lower and Dow Jones could drop to yesterday’s lows at 28,438.0. If support at that price does not hold, the stock index could retest its mid-December highs at 28,307.2.

On the other hand, a bullish close above the Fib level and 100 SMA could mean that there are enough buyers in the market. The Dow could rally back up to its record-highs around 28,727.7.