Our expectations suggest a return to the index’s decline during its upcoming trading.
The Dow Jones Industrial Average jumped up during its recent trading at the intraday levels, to achieve sharp gains in its last sessions, by 2.68%, to gain about 823.32 points and settle at the end of trading at the level of 31,500.69. This is after its decline in Thursday’s trading by 0.64% as the index closed last week’s trading with strong gains of 5.39%. It is breaking a series of losses that continued for three consecutive weeks, and the index witnessed its largest weekly gains since late May.
US stocks closed sharply higher on Friday, as a gauge of inflation expectations showed signs of easing against the previous estimate, while St. Louis Fed President James Bullard played down the possibility of a recession.
The University of Michigan’s final reading on consumer confidence showed that expectations for 5-10 year inflation were revised lower to 3.1%, down from 3.3% in a previous reading.
Louis Federal Reserve Chairman James Bullard said Friday at a UBS conference in Switzerland that the United States has a better chance of avoiding a recession if the central bank raises interest rates faster than usual in an effort to tame the hottest inflation in 40 years. Premature stagnation.
In economic data released on Friday as well, the gauge of new home sales for May came out stronger than expected. While on Friday, San Francisco Fed President Mary Daly joined others in pointing to support for another big interest rate hike in July to slow inflation.
Technically, the index’s rise comes amid the influx of positive signals on the relative strength indicators, after reaching earlier areas of oversold activity. This is in light of the dominance of the short-term corrective bearish trend along minor and major slope lines, as shown in the attached chart for a (daily) period. Continued negative pressure of its trading below the simple moving average for the previous 50 days.
Therefore, our expectations suggest a return to the index’s decline during its upcoming trading, throughout the stability of the resistance 32,578.70, especially in the event of its stability returning below the 31,000 level, to target again the important support level 29,653.30.