The Dow Jones Industrial Average(DJIA) saw a $915(-4%) loss on Friday after failing to move above the 38.2% Fibonacci retracement level which was pointed out in the previous daily chart shared. Price remaining below the 38.2% Fib level indicates that a bearish trend is still in play and that further short-term price weakness can be expected as long as price is below this level. The anticipated move this week is a decline below the 23.6% Fibonacci level and a filling of the price gap that was created from Monday’s close into Tuesday’s open.
The Relative Strength Index(RSI) shows price momentum leveling out just under the centerline(50 level) which is the centerline of the total RSI range. An RSI reading below 50 indicates overall bearish momentum for price, while a reading above 50 indicates bullish momentum for price.
The Price Percent Oscillator(PPO) has created a bullish crossover with the green PPO line rising above it’s purple signal line. This cross indicates a short-term shift to bullish price momentum, but the overall momentum behind price remains bearish as long as the PPO line is below 0.
The market decline on Friday came as the coronavirus economic relief bill was passed which is the largest fiscal stimulus in U.S. history at $2.2 trillion dollars. Traders selling the passing of this bill seems to indicate that “buy the rumor, sell the news” is their train of thought right now and also marks the end of short-term bullish news to incentivize traders to buy. With this bill now being passed, the bulk of the news cycle will mostly be bearish with rising case counts and negative economic data being released going forward which is more than likely going to shake traders’ confidence in the market as well as their faith in the ability of the Federal Reserve and Trump administration to provide adequate economic relief via bailouts and fiscal stimulus to ease traders fears of a looming recession/depression. Major economic data set to be released this week are PMI(manufacturing trends) and jobless claims which is expected to show another extremely high number of people filing for unemployment on top of last week’s record 3.2 million initial claims. Last week’s initial claims number was the highest on record, a number that is expected to be just as high, if not higher, on the next jobless claims release this week as not all those who attempted to file for unemployment in the previous week were successful due to high traffic on claims sites causing sites to go down nationwide.
With an estimated three weeks until stimulus checks are direct-deposited, this lag between the passing of the bill and cash actually being placed into the hands of those who need it is indicating that we will begin to see missed rent/mortgage payments as well as other credit and loan obligations which will put further strain on an already fragile credit market.
The Relative Strength Index(RSI) shows price momentum leveling out just under the centerline(50 level) which is the centerline of the total RSI range. An RSI reading below 50 indicates overall bearish momentum for price, while a reading above 50 indicates bullish momentum for price.
The Price Percent Oscillator(PPO) has created a bullish crossover with the green PPO line rising above it’s purple signal line. This cross indicates a short-term shift to bullish price momentum, but the overall momentum behind price remains bearish as long as the PPO line is below 0.
The market decline on Friday came as the coronavirus economic relief bill was passed which is the largest fiscal stimulus in U.S. history at $2.2 trillion dollars. Traders selling the passing of this bill seems to indicate that “buy the rumor, sell the news” is their train of thought right now and also marks the end of short-term bullish news to incentivize traders to buy. With this bill now being passed, the bulk of the news cycle will mostly be bearish with rising case counts and negative economic data being released going forward which is more than likely going to shake traders’ confidence in the market as well as their faith in the ability of the Federal Reserve and Trump administration to provide adequate economic relief via bailouts and fiscal stimulus to ease traders fears of a looming recession/depression. Major economic data set to be released this week are PMI(manufacturing trends) and jobless claims which is expected to show another extremely high number of people filing for unemployment on top of last week’s record 3.2 million initial claims. Last week’s initial claims number was the highest on record, a number that is expected to be just as high, if not higher, on the next jobless claims release this week as not all those who attempted to file for unemployment in the previous week were successful due to high traffic on claims sites causing sites to go down nationwide.
With an estimated three weeks until stimulus checks are direct-deposited, this lag between the passing of the bill and cash actually being placed into the hands of those who need it is indicating that we will begin to see missed rent/mortgage payments as well as other credit and loan obligations which will put further strain on an already fragile credit market.