Dow Jones
The Dow Jones declined by more than 330 points yesterday as the sell-off in US equities accelerated. The trend is continuing in the futures market, where the Dow has fallen by more than 90 points. Other major US indices like the S&P 500 and Nasdaq 100 are also down by 0.35% and 0.20%. Similarly, the Russell 2000 is down by 0.45%.
The Dow Jones is falling ahead of key financial results from several retailers in the United States. Some of the firms that will release today include Target, TJX, and Lowe’s. Other important firms that traders will be watching are Nvidia and L Brands.
While stocks received a boost from the announcement of a Covid vaccine, investors are now worrying about the surging number of cases in the United States. Yesterday, the country confirmed more than 166k cases, bringing the total number to more than 11.4 million. More than 248k Americans have already died so far.
Therefore, Dow Jones decline is mostly because of the lockdowns that several states have started to implement. These states include California, New Mexico, and Oregon. Other states could follow suit.
Elsewhere, in Europe, the DAX index and FTSE 100 have fallen by 0.20% and 0.42% ahead of key inflation and car registration numbers from the region. The DAX is trading at €13,095 while the Footsie is trading at £6,322.
In other assets, crude oil price has dropped by 0.30% after data by the American Petroleum Institute (API) showed that US inventories rose last week. The data came ahead of the official inventory data by the EIA.
In currencies, the US dollar index (DXY) has dropped a bit due to the relatively strong euro and pound. The focus will be on the UK and EU CPI data that will come out shortly.
The daily chart shows that the Dow Jones formed a double top pattern at an all-time high of $30,078. In most cases, this pattern is usually bearish because it signals that there were not enough buyers ready to push the price higher. Still, the price remains in a bullish trend, supported by the 25-day moving average and the rising red trendline.
Therefore, the outlook for the Dow, at this point, is neutral. If it manages to move below the red line, it will be a signal that bears have prevailed. However, a strong punch above $30,078 will mean that bulls have won, which will signal more upside for the blue-chip index.
