DOW FUT : Rocketing To Critical Level

(Tue, 26 May 2020). The Dow Jones is on fire and the S&P 500 just reclaimed the critical 3,000 milestone. Is this a launchpad back to record highs? Some investors think so.

Dow Jones Industrial Average (DJIA) futures rocket 550 points higher on Tuesday. The S&P 500 looks set to open above the huge psychological level of 3,000. Breaking and holding this level could act as a launchpad for a return to previous highs. After the long Memorial Day weekend, traders are ready to pounce. Dow Jones Industrial Average (DJIA) futures are up 550 points (2.25%) in early trading.

But more importantly, the S&P 500 looks set to breach its make-or-break level of 3,000 at the open. That’s a critical psychological milestone we’ve been battling for almost a month. If it holds, this level may act as a launchpad higher.


Dow Futures Race Higher

Dow futures are on fire this morning, following yesterday’s closure for Memorial Day. It seems traders have plenty of pent-up optimism ready to unleash on the markets. S&P 500 futures and Nasdaq Composite futures were up 2% each.


Why This Level Could Be A Launchpad For The Stock Market

First of all, 3,000 is big round number. It’s a psychological achievement for investors and that matters. When the S&P broke 3,000 for the first time in 2019, it was a big event. Reclaiming it in the midst of a global crisis is a milestone that can’t be ignored. The level also coincides with the index’s 200-day moving average. That’s a line in the sand for technical traders used to indicate the long-term trend. Trending above it is usually bullish, trending below is bearish.

Flipping this technical indicator, and trending above it, could truly signal the beginning of a new bull market. Technical analyst Carolyn Boroden said, in recent interview with Mad Money host Jim Cramer, that breaking this level could trigger a run to “3,720 and possibly 4,136.” Both targets would be new all-time high for the market.


UBS : Stocks To Watch

Wall Street remains cautiously bullish as we approach this make-or-break level. UBS’s Haefele sees some upside potential. With tech stocks hitting all-time highs, there may not be much more room to the upside. But, as noted yesterday, beaten-down value stocks may be starting to look appetising. Stalwarts like Boeing (NYSE:BA), Berkshire Hathaway (NYSE: BRK), and Walt Disney (NYSE:DIS) have been left on the sidelines throughout the relief rally.


Dow Jones Today

Optimism has returned to the market as investors price in a cautious return to normal. But, be wary of ongoing US-China tensions that could rattle sentiment. White House National Security Advisor Robert O’Brien said this weekend that Washington wouldn’t hesitate to impose sanctions on Beijing if China exerts too much power over Hong Kong.

Political risk is going to be with us for some time. It’s going to add to that market volatility. JP Morgan’s Kerry Craig admitted that this political tension will likely stay with us until the November election.




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