Last Friday, the Dow Jones finished the day basically unchanged after the release of two key economic reports. The US NFP report beat expectations, with the market initially trimming rate cuts expectations and spiking downwards, but after a couple of minutes, the price reversed as under the hood the data wasn’t as good as it seemed. Sometime later, we got the release of the ISM Services PMI and that’s where the real shocker came from.
Besides the data missing across the board, the employment sub-index cratered to levels seen only in the dot-com recession, the global financial crisis and the covid recession. Although the market might keep on cheering about the upcoming rate cuts, these are bearish signals and they are coming right around the stock market highs, so the bulls should start to get extra careful going forward.
Dow Jones Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones last Friday finished the day basically unchanged. The level to watch is the support around the 37066 level where we can find the confluence of the recent swing low and the 21 moving average. This is where we can expect the buyers to step in with a defined risk below the support to position for new highs. A break below the support would open the door for a bigger drop into the 36030 level.
Dow Jones Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the uptrend has been supported by the trendline but the price recently broke below it signalling a bigger correction to follow. We can also notice that the latest leg higher diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. If the price breaks below the 37066 level the reversal would be confirmed and the 36030 level will be the next target.
Dow Jones Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action and we can notice that the price is struggling at a minor downward trendline as the sellers are probably leaning on it to position for a drop into the 37066 support with a break lower as the ultimate target. The buyers will need the price to break above the trendline and the most recent lower high around the 37620 level to regain some control and position for new highs.
Upcoming Events
This week is basically empty on the data front with the only two notable releases scheduled for Thursday when we will get the US CPI report and the US Jobless Claims figures.
