The Dow Jones Industrial Average declined during its recent trading at the intraday levels, to record losses in its last sessions, by -0.86%, to lose the index towards -292.30 points. It settled at the end of trading at 33,706.75, after it slightly increased during Thursday’s trading by amounting to 0.06%. The index ended the week declining by -0.16%.

Louis Fed President James Bullard is open to the idea of ​​another massive interest rate hike at next month’s central bank meeting, the Wall Street Journal reports. “We must continue to move quickly to the level of the policy rate that will put significant downward pressure on inflation,” he said, and “I don’t really understand why you would want to drag the rate increases into next year.”

The Federal Reserve raised its benchmark overnight interest rate by 225 basis points since March to fight inflation that has reached its highest level in four decades.

The focus next week may be on Federal Reserve Chairman Jerome Powell’s speech on the economic outlook at the annual conference of global central bankers in Jackson Hole.

Dow Jones Economic News

A survey from the Bureau of Labor Statistics showed that the unemployment rate fell in 14 states in July, rose in three states, and stabilized elsewhere. The national unemployment rate fell to 3.5% in July from 3.6% in June, marking the lowest level since February 2020 just before the pandemic began. Nonfarm payrolls nationwide increased by 528K jobs in July after increasing 398K jobs in a revised reading in June.

Technical Outlook

Technically, the index’s decline came as a result of the stability of the important resistance level 34,118.

• This is the resistance that we had referred to in our previous reports.
• The index is trying to reap the profits of its previous rises, and it is also trying to gain positive momentum that may help it recover and penetrate that resistance in the future.
• It is also trying to drain some of its saturation of the clear buying of the relative strength indicators, especially with the influx of negative signals from them.

All of this comes because of the continuation of the positive support for its trading above its simple moving average for the previous 50 days. In addition, it is being affected by leaving the range of a descending price channel that was limiting its previous trading in the short term, as shown in the attached chart for a (daily) period.

Our expectations suggest a return to the index’s rise during its upcoming trading, especially throughout the stability of the support level 33,240, to target again the resistance level 34,118 in preparation for attacking it.

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The Dow Jones Industrial Average declined during its recent trading at the intraday levels, to record losses for the second day in a row, by -1.23%. It lost about -402.230 points and settled at the end of trading at the level of 32,396.171, after it fell slightly during Monday’s trading by a rate of -0.14%.

Stocks opened lower as geopolitical tensions heightened due to US House Speaker Nancy Pelosi’s visit to Taiwan, defying Chinese authorities who have warned of dire consequences if the trip occurs.

The Dow Jones index led the decline in Wall Street, the profit-related decline in Caterpillar Inc. put pressure on the Dow Jones index. Visa shares also affected the performance of the index, after it fell on the negative statements by the great investor Bill Ackman, who called while speaking, credit card giant Visa is offering payment services to Pornhub.

CNN reported that US House Speaker Nancy Pelosi’s visit to Taipei is the first time a US House speaker has visited Taiwan in 25 years. The news report said her trip comes at a low point in US-China relations and despite the Biden administration’s warnings of pause, China considers Taiwan part of its territory and has warned against responding to the visit.

US Economic News

San Francisco Fed President Mary Daly reportedly said on Tuesday that inflation figures are “too high” and that the Fed’s work to ease price pressures in the US economy is “not yet complete.” Speaking on the same day, Chicago Fed President Charles said Evans said a 50 basis point increase in the target rate at the September meeting was reasonable and had not hesitated to support another 75 basis point increase.

Cleveland Federal Reserve President Loretta Meester said Tuesday in a live interview with The Washington Post Live that the decline in second-quarter gross domestic product reported last week, the second consecutive quarterly decline, does not mean the US economy is in a recession. Meester said the recent moderation in consumer demand is what the Fed wants to see, and that bringing demand back in line with supply is key to slowing inflation.

US job opportunities fell to 10.7 million in June from 11.3 million in the previous month, according to the Bureau of Labor Statistics. The estimate in a survey compiled by Bloomberg was about 11 million. Employment fell to 6.4 million from 6.5 million bringing the employment rate down to 4.2% from 4.3%. At the same time, the number of people leaving their jobs decreased but remained above the level a year ago as workers were confident of finding another job.

Dow Jones Technical Outlook

Technically, the index faced some pressure as a result of the relative strength indicators reaching overbought areas. The beginning of the emergence of a negative crossover in them, especially amid its trading along a corrective bearish slope line in the short term. This comes despite the continuation of the positive support for its trading above its simple moving average for the previous 50 days.

Therefore, our expectations indicate more decline for the index during its upcoming trading, as long as the resistance 33,240 remains intact, to target the support level 31,885.

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The macro situation is not good, but no market moves in one direction forever.

Monday was Memorial Day in the United States, so any S&P 500 Index trading will have been done after hours in the futures markets. That being said, we did try to rally a bit but it is worth noting that we stalled right at the 50-day EMA. The 50-day EMA is a rather commonly followed technical indicator, so the fact that we stopped at that point it’s likely that we will have a certain amount of technical shorting at this point.

If we turn around and break down below the 4150 level, that will be the first barrier for the sellers to get through. After that, the 4100 level then could potentially be supported. If we were to break down below the 4100 level, then the market almost certainly breaks down rather drastically at that point. Given enough time, the market would then go looking towards the 3900 level.

This has been a very bullish run over the last several days, but keep in mind that we are in a very bearish market, so occasionally you will get these massive moves higher. Bear market rallies are some of the most vicious ones, but they are particularly tricky due to the fact that they also tend to sell off just as rapidly. Even if we do try to go higher at this point, it’s really not until we break above the 4300 level that you have the “all clear” for a trend change. What’s also interesting about that area is that the 200-day EMA sits just above it as well, so I anticipate a huge battle in that area. Yes, the S&P 500 was oversold, but all of the fundamental reasons for this market to fall remain intact, and is difficult to imagine that things have suddenly changed. Yes, interest rates have dropped a bit in America, but that is simply because people are starting to buy bonds. Eventually, the market will figure that out, and start to drop again. However, if we break above the 4300 level, we have to follow the price and stop arguing. The macro situation is not good, but no market moves in one direction forever, so I think what we have seen here has been a little bit of a relief rally more than anything else.