- Nvidia is on the move, making a significant positive impact.
- In the inflation war, the Fed demonstrates naiveté.
- The Dow Jones is bullish, but it will try to retest support after breaking the trend limit.
The Dow Jones began to show excitement by recording a positive close over the past few days. That came in response to stock futures trading higher after minutes from the latest Federal Reserve meeting confirmed the central bank will raise interest rates but will not be as aggressive as has been shown.
The Fed also gave itself some wiggle room by saying that if it sees that its efforts to slow the economy are working, the central bank will be “in a good position later this year to assess the effects of policy tightening and the extent to which economic developments require policy adjustments, which means it could raise rates.”
One of the troubling things about this market downturn is how brutally brutal it has been lately. Company insiders have never shown much interest in their discounted stock. But that changed in a big way. They are bullish now, signaling the stock market is oversold and will have at least a short-term bounce. Using history as a guide, the Dow Jones Industrial Average DJIA, +0.60%, S&P 500 SPX, +0.95%, and Nasdaq Composite COMP, +1.51%, could gain 15%–20% over the next three months.
“Quality” means buying by insiders with a strong record, buying by executives of directors away from business, and bullish formations such as cluster buying. All of these signals have improved significantly. This has also been shown in the existing pattern of value movements. Although there is a slight bias, a very clear and definite direction is starting to form.
Some stocks that greatly boosted the index at the last minute, such as Dick’s Sporting Goods (DKS), initially fell before climbing back around 10%. Wendy’s (WEN) was up about 10%, and Intuit (INTU) was up 8.2% after the accounting and tax software company posted better-than-expected third-quarter fiscal earnings. Nordstrom (JWN) rose nearly 14% after the retailer raised its guidance for the second time this year. After the homebuilder reported better-than-expected second-quarter profit and sales, toll Brothers (TOL) added 8.5%. Shares of Nvidia (NVDA) were up 5.1% in the closing minutes.
What needs to be carefully anticipated for today is the statement and testimony by Jerome Powell as Chair of the Federal Reserve of the United States (at 1600 UTC), which has the potential to have an impact on the volatility of price movements for major stocks because it relates to the clarity of policies that will be implemented next July.
Dow Jones technical analysis:
The movement of the Dow Jones this week is in line with the expected probability. It moved positively until it broke the higher trendline barrier and closed positive, up by 192 points, or 0.60%. The market is still trying to penetrate the supply area between 32200 and 32600. This is indicated by the presence of major stocks that contribute greatly to pushing up the value higher than before. But if the Fed’s policies continue to cast a shadow, the market could stop moving and fall back to the nearest support at 31,900.
The certainty of the closing for this week to remain positive or not can influence trading decisions which will start next week. However, the belief that it will keep going up until it crosses the fresh supply zone will initiate a trend reversal when it starts to enter the third quarter.