Indices Market Analysis – Dow Jones

*Live market analysis of Dow Jones Industrial Average Index!*

Good morning, I hope you all had a good weekend. This is going to be a quick blog post to show you my current thoughts on the Dow Jones Index and how I plan to trade it over the next few weeks.

Let’s look at the daily timeframe chart to start. I will explain what has happened over the past few days and weeks.

Dow Jones Index daily timeframe chart

Price has continued to make new all time higher highs almost every week so far for the past few months and this really shows on the daily timeframe chart. Any decent bearish pullbacks in price have been quickly reversed and buyers continuing to gain control.

Last week we saw the introduction of news regarding the corona virus and this had an immediate effect on global stocks. Most indices began to sell off and the Dow Jones was no exception. Price has now fallen almost 800 points since Monday last week and it is now approaching an interest level for me.

Dow Jones Index 4 hour timeframe chart

There is a nice bullish trendline drawn across the previous 2 market lows on their respect market sell-offs. Price is currently interacting with this trendline around the $26,000 price level and this coincides with the 0.618 fibonacci retracement level.

If price forms support here and these 3 levels hold strong, a higher low would be good to see and I believe the Dow will then go on to climb back up to the $29,500 zone or further.

*This is subject to support forming!

As it stands, price is actually breaking through the trendline so until a 4hr candle closure is formed with price back above the trendline, I will not take this trade.

Market Fundamentals:

Earnings Watch: Nearly half of index, 14 out of 30 companies, expected to report holiday-season results in busiest week of the season, which also includes Facebook, Tesla and Amazon

The Dow Jones Industrial Average increased more than 22% in 2019 and is already up 2.2% through three weeks of 2020, but it is about to face its biggest test of the young year, and potentially many years.

Nearly half of the 30 Dow DJIA, -0.58% components are scheduled to report results from the holiday season in the coming week, which will be by far the busiest week of the earnings season.

There are 14 Dow companies expected to report, the most companies from the blue-chip index to report in a single week since at least 2014, a group that includes two trillion-dollar market caps in Apple Inc. AAPL, -0.29% and Microsoft Corp MSFT, -1.01% Plenty of non-Dow companies will throw their numbers in as well — 141 of the S&P 500 companies are expected to report, including Facebook Inc. FB, -0.83%, Inc. AMZN, -1.22% and Advanced Micro Devices Inc AMD, -2.63%

The 85 members of the S&P 500 that have reported results thus far have seen net income fall by 0.3% on average from a year ago, though Credit Suisse Chief U.S. Equity Strategist Jonathan Golub said it’s tough to make broader inferences from early reports given different sectors tend to post results at different parts of the earnings cycle. More than a third of S&P 500 that have reported so far sit in the financials sector, which could skew those results.

Trading Sentiment:

The retail trading sentiment data is showing a net short bias on the Dow Jones. As always, I try to look for positions at extreme opposites to this data because the majority of the time, retail traders lose money.

65% of trade positions are short positions with a slight reduction in daily and weekly positions occurring which is most likely due to existing profitable short positions taking profit.

Trade Set Ups:

My ideal/potential trade set ups can be seen on the chart below.

Useful Links:

All my technical analysis is done using the TradingView platform. You can get access via the link below.

My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.

FTMO Trader Funding Programme.

Thanks for reading and please don’t forget to LIKE, SHARE and FOLLOW my blog to stay up to date with the latest market analysis and trading education posts.

DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.

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