The Dow Jones Industrial Average rose slightly during its recent trading at the intraday levels, to achieve slight gains in its last sessions, by 0.09%. It gained about 29.08 points, and settled at the end of trading at the level of 32,832.55, after its rise during Friday’s trading by 0.23%.

Traders were hoping that a strong labor market would defy the latest evidence of a slowing US economy, as the quarterly corporate earnings season draws to a close, which was well-received in the second quarter overall.

But last week’s strong jobs report for the month of July makes it more difficult for investors to think that the Fed will rely on its plans to raise interest rates at its next meeting next month, as Friday’s solid work report indicates that companies have not cut employment distance.

Investors were also weighing the implications of the massive healthcare, climate and tax package passed by the Senate in a party-line vote on Sunday, giving President Joe Biden a political victory. The package is expected to win approval in the Democratic-controlled House of Representatives.

Traders are now waiting for the CPI to be released on Wednesday, with economists expecting an 8.7% YoY increase which will be down from 9.1% in June. The market now needs to see that inflation is going down, or else it will assume that the Fed will remain somewhat aggressive in raising interest rates and stocks will collapse.

Technical Analysis

Technically, the index is rising with the support of its continuous trading above its simple moving average for the previous 50 days, until it reached its last trading to test the ceiling of that bearish corrective price channel that limits its previous trading in the short term, as shown in the attached chart for a (daily) period, with the influx of Negative signs on the RSI indicators, after reaching overbought areas.

Therefore, our expectations suggest a return to the index’s decline during its upcoming trading, as long as the resistance level 33,240 remains intact, to target the support level 31,885.

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Our expectations indicate more rise for the index during its upcoming trading.

The Dow Jones Industrial Average rose during its recent trading at the intraday levels, to achieve gains in its last sessions, by 0.27%, to gain about 94.65 points. It settled at the end of trading at the level of 34,955.90, after rising by 0.44% in Friday’s trading.

The yield curve continued to decline, meaning that short-term interest rates are catching up with long-term rates, the two-year Treasury yield rose 0.06 percentage point to 2.34%, while the 10-year yield fell 0.02 percentage point to 2.46%. This indicates that the recent inflation may damage economic growth in the long run. It’s no surprise to see the Dow Jones, which is made up of growth-sensitive stocks, performs the worst out of the three major indices.

The concern that upcoming interest rate hikes by the Federal Reserve would slow the economy, supported technology stocks. When that happens often the most economically sensitive stocks underperform, while investors go to the fast-growing technology companies who are in the tech sector. When economic demand slows, inflation will eventually do the same, which determines any increases in long-term bond yields. Low bond yields increase the value of future earnings, and many growth and technology stocks are valued on the basis that they will deliver significant profits many years into the future.

Technically, the index is positively affected by its exit from the range of a bearish corrective price channel that limited its previous trading in the short term. It was shown in the attached chart for a (daily) period, taking advantage of the positive pressure coming from its trading above its simple moving average for the previous 50 days. This is in addition to the influx of signals, positive RSI indicators, despite reaching overbought areas. All of this comes in light of the dominance of the main bullish trend over the medium term.

Therefore, our expectations indicate more rise for the index during its upcoming trading, as long as the main support level 34,000 remains intact, to target the first resistance levels at 35,631.20.