Dow Jones Industrial Average Technical Analysis July 12, 2016

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dow jones industrial average

During the day on Monday, the Dow Jones Industrial Average broke out to the upside, finally clearing the 18,150 level. This is an area that has been resistive a couple of times now, and where we stopped after the better than expected jobs number on Friday. By breaking above there, the market seems to have picked up momentum, and as a result I believe that we continue to see this market offer buying opportunities every time we pullback.

On this chart, I have several different moving averages, with the red moving average being the 50 day exponential moving average, the green one being the 100 day exponential moving average, and the black one being the 200 day exponential moving average. All of them are pointing to the upside, showing nice momentum. On top of that, they have a nice spread which means we are starting to see real momentum. Below there, I have the MACD indicator, and that is breaking to the upside as well. With this being said, it looks as if the momentum certainly has started to pick back up.

Interest rate factor for Dow Jones Industrial Average

Even though we have a strong jobs number, the reality is that the Federal Reserve will not be able to raise interest rates anywhere near as rapidly as once thought. They are almost certainly on hold after the British have voted to leave the European Union, because there far too many unknown factors out there. At best, we may be looking at one interest-rate hike by the end of the year.

Because of this, money is flowing into the stock markets and out of the bond markets. This of course is because there’s almost nothing in the way of returns, and the Dow Jones Industrial Average has the added benefit of having several blue-chip stocks. These pay some of the most reliable dividends in the stock market, so having said that it makes sense that they would be used as a proxy for a very unattractive bond market.

At this point in time, I believe that we could go as high as 20,000 in the Dow Jones Industrial Average, although I’m not suggesting that we will go there right away. I believe that pullbacks will continue to offer buying opportunities on short-term charts, and that we should now see the 18,150 level act as a bit of a “floor” in this market overall.

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