บทที่ 9 06/06 DJIA: Buy the Dips while Bulls Are to Be Continued
Abstract: After the end of the previous week's surge, U.S. stocks were relatively flat in Monday's trading. Major stock indexes fell slightly after fluctuating back and forth near the opening level of the day.
Fundamentals
Major U.S. stock indexes finally closed negative on Monday. The Nasdaq index fell slightly by 11.34 points, or 0.1% to 13,229.43 points, the S&P 500 index fell by 8.58 points, or 0.2% to 4,273.79 points, and the Dow Jones index fell by 199.90 points, or 0.6% to 33,562.86 points.
After the strong upward trend of the U.S. stock market last Thursday and Friday, investors want to take a break to assess the market prospects. To this end, Wall Street trading fluctuated.
The sharp rebound of U.S. stocks last week coincided with the passage of legislation to raise the U.S. debt ceiling by the Senate and the House of Representatives and the release of the high-profile monthly employment report in the U.S. As the stock price soared, the Nasdaq index hit its highest closing price in more than a year, while the Standard & Poor's 500 index hit a nine-month closing high.
This week, as the market looks forward to next week's Fed meeting, it is expected that the trading activity throughout the week may still be somewhat depressed. The Fed will announce its latest monetary policy decision next Wednesday, and it is widely expected that the Fed will suspend a series of recent interest rate hikes. At the same time, next week's important inflation report may also become the focus, because these data may affect whether the Fed will resume raising interest rates next month.
The bond market is unlikely to fluctuate too much before the U.S. inflation data in May is released next Tuesday. Because the position in the fixed income field is quite light, it shows that there is no huge pressure to close the position. With the settlement of the debt ceiling and the stable labor market, most of the short-term negative catalysts have temporarily disappeared, and this optimism may continue into the next week.
The "silent period" that the Fed started this week means that the comments of Fed officials are limited. "Silent period" means that Fed officials avoid communicating with the market before making policy decisions, which leads to increased volatility. Considering that the market is digesting the expectation of suspending interest rate hikes, risk appetite will continue to support the expectation of a moderate rise in the stock index.
Technical Analysis
After a major bullish reaction last week, the Dow Jones Industrial Average traded close to the opening parity this week. With the resolution of the debt ceiling problem, investors may bet more upside. Nevertheless, investors will remain cautious, and will only enter long positions when the bearish correction is completed in the market, and continue to be in wait-and-see mode while hoping to break through the resistance level.
This is because the index has not yet broken above the 200-day SMA and stabilized above the horizontal line. This week, we may see a test of the horizontal line. Investors need to closely watch the reaction of the index and if the index can continue to break and close above the trend line, it is likely to remain bullish until the test of the horizontal line. However, if the index continues to reverse to the downside, prices will remain in consolidation. It is recommended to buy the dips.
Trading Recommendations
Trading direction: Long
Entry price: 33400
Target price: 34043
Stop loss: 33000
Deadline: 2022-06-20 23:55:00
Support: 33311, 33176, 33021
Resistance: 33850, 33988, 34081
