Monday, October 20, 2014

Tailwind on US Markets - Will Dow Gain 200 points Today?

US stock futures are showing gains. There are more than one third of Dow components who will be announcing their earnings this week. So its a big earnings week ahead. It seems Dow is on course to cruise to its 200 Day Moving Average(DMA) of 16588 and beyond. In absolute terms this means we are about 200 points shy of 200 DMA in Dow. In today's trade it will be interesting to watch whether Dow can reach this target of 16588. This 200DMA being the first resistance for Dow on its present journey of recovery, it is expected to retrace its step from this level to some extent.

In short following are couple of interesting things to watch for in Dow today, if you are on the long side of trade :-
  1. Will Dow reach its first resistance level of 200 DMA?
  2. If Dow reaches 200DMA, will it close above it or not?
If Dow closes above 200DMA, then we can expect a move up to 16900 in this week. If Dow closes sharply below 200DMA then it runs the risk of  revisiting the lows of last week- a terrifying thought for the bulls!

Though Asian markets have done well for themselves today, European markets are down on bad news from a major German software maker. We need to see whether the tailwind of expected good earnings week ahead will work for Dow or will European Wall of Worry will drag it to last week's levels. Whichever way you look at it, today's action in US markets will set the tone for the week ahead

No comments:

Post a Comment