Markets

Dow Jones Industrials Rally Not Over

Although clearly in an overbought condition, the bullish trend in the Dow Jones Industrial Average (DJIA) remains intact with key resistance now sitting at 17,310. Another set of monthly job gains in the U.S. combined with the announcement of additional easy money measures by ECA president Mario Draghi were the latest reasons for equity prices to rise.

While additional gains in the DJIA are likely, it is worth pointing out that the upward sloping trading range that it is currently in is becoming increasingly narrow. Over the short-run this configuration should not be a problem. In future months, however, it could nevertheless become one. For the time being, support sits at 16,220 for the DJIA and rises rapidly over time. Resistance, on the other hand, now sits at 17,310, but rises much less rapidly.

Low levels of price volatility underscore the current bullish theme in stocks but at the same time offer investors an inexpensive way to protect against an unexpected change in market psychology. Despite record highs seen on both the Dow Jones Industrial Average and the S&P 500 index, unusually low levels of interest rates continue to make the case for taking risk. That being said, it will likely take a move out of the current trading range (one way or the other) to jolt investors out of their complacency and change their market outlook. For now, however, it is steady-as-she-goes.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.