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Dow Jones Technical Analysis: Index Closes Higher – 16 March 2022

Our expectations suggest a return to the index’s decline during its upcoming trading.

The Dow Jones Industrial Average rose during its recent trading at the intraday levels, to achieve gains for the second day in a row, by 1.82%, to add to it about 599.10 points. It settled at the end of trading at the level of 33,544.35, after its almost negligible rise in Monday’s trading Where it increased about 1.05 points only.

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All 30 index indices rose, except for two stocks that experienced losses. The list of stocks that gained the most in percentage terms was led by Walt Disney Co. by 4.01%, and Microsoft Corp. by 3.87%, and Procter & Gamble Co. by 3.60%.

Tech stocks benefited a lot amid the decline in oil prices and bond yields halting their gains, reducing investors’ fears about inflation resulting from high energy prices in particular, which harms the consumer directly.

On the economic data front, the US Producer Price Index for February showed a monthly increase of 0.8%. Economists polled by the Wall Street Journal had been looking for a 0.9% increase. The annual rate is unchanged at 10%.

This puts the Federal Reserve in focus, as the central bank is expected to raise the benchmark interest rate by a quarter of a percentage point today.

The New York Federal Reserve’s Empire State Manufacturing Index fell 14.9 points to minus 11.8 in March. Economists had expected a reading of 5.5.

Technically, the index’s rise came amid the influx of positive signals on the relative strength indicators. We note that it reached areas of oversaturated with purchase operations, considering the index’s trading in a bearish corrective price channel range that limits its recent trading in the short term, as shown in the attached chart for a (daily) period. At the same time, it suffers from the negative pressure of its trading below the simple moving average for the previous 50 days.

Let’s attribute the rise of the recent index as an attempt to compensate for part of what it incurred from previous losses, and our expectations suggest a return to the index’s decline during its upcoming trading, especially in the event of its stability returning below the level of 33,271.90, to target the support level 32,071.40.

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