DJCFD:DJI   Dow Jones Industrial Average Index
The News
  • Is this finally the end of the long trend down or are we do for more turmoil as the unemployment claim numbers are released?
  • So far, the market has been on a rally as the stimulus bill is being hammered out in Congress. There are a few who are holding out over key details of the bill.
  • COVID-19 is only continuing to grow exponentially with the infection number of daily infection growing bigger with each passing day. Hospitalization rates would be a better measure to gauge how well the populace is doing but I haven't seen any public data of that yet.
  • Trump has been all over the board totally discounting the effect of the virus about a month ago to declaring a national emergency to now thinking the economy will be up and running by Easter (April 12th)

Sentiment
Even with the economy back up and running, many will have changed their habits to try to avoid catching the coronavirus. It is easy to reopen businesses but it is hard to change the behavior of consumers. It would be good to see businesses open in a limited fashion so as long as we aren't causing another wave of sickness.
Many people are calling this a bull trap so take with that what you will.
Consumers will certainly hold onto their cash more tightly and those affected by the recent bout of unemployment will no doubt reconsider their budgeting plans and save more to buffer in times of uncertainty. This recovery is unlikely to be shaped like a V but rather a more steady climb out of the trenches we have dug over the past few days.

The Technicals
We have either concluded what could be called the third impulse wave in a series of 3 or starting on wave 4 in the series of 5. Both have made it into the extension zone that defines the wave.
If this is a 5-wave sequence, we will see it arrive around 17,600 as it completes its sequence. Given the wild intraday swings, the candle wicks can certainly extend beyond that.
If it is the end of the 3-wave pattern, the dotted lines show a rough estimate of where it could head in the next few days but I question the strength of a move like that. Just a thought that I'd like to toss out there.
The trend is extremely bearish but steep as well which can see some stability in the future.
RSI has a bullish divergence which is a promising sign of better things to come. It shows promise but keep an eye out for any more moves down. Perhaps a triangle will form! That is a scenario I can see happening given the current economic state.
Volume is holding steady and not on a decline so that holds some promise that we are entering into a more stable trend rather than the waterfall we have had.

Comments

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