U.S. Markets On The Bull, 25000 In View For The DJIA

Posted Thursday, July 12, 2018 by
Shain Vernier • 2 min read

Bids are hitting U.S. equities as a strong collection of economic reports is being digested by the market. Led by the earlier release of U.S. CPI and Initial Jobless Claims, optimism is on display for the Thursday session. The DJIA is creeping ever closer to the 25,000 benchmark and the S&P 500 is looking to extend its hot streak of early July.

All in all, it is risk-on toward the U.S. indices.

Economic Data

This morning brought the release of several U.S. economic metrics. While the only primary market driver is CPI, there are a few other highlights of today’s reports:

Event                                                                 Actual      Projected

CPI (YoY, June)                                                      2.9%             2.9%

CPI ex. Food and Energy (YoY, June)               2.3%             2.3%

Continuing Jobless Claims (June 29)             1.739M        1.720M

Initial Jobless Claims (July 6)                            214K            225K

Perhaps the only sore spot in this group of metrics is the Continuing Jobless Claims data. The number underperformed expectations, yet still came in under the previous release. Other than that, things appear pretty rosy for the U.S. economy at the moment.

DJIA Technicals

It has been said, “so the Dow goes, all markets go!” I don’t particularly subscribe to that point of view, but arguing with conventional wisdom is exhausting. Nonetheless, it never hurts to take a look at the DJIA as a point of reference.

September E-mini DOW Futures (YM), Daily Chart
September E-mini DOW Futures (YM), Daily Chart

The daily chart for September E-mini DOW futures clearly illustrates the recent heat on U.S. large caps. After yesterday’s retracement, it is full speed ahead to 25,000.

Here are the levels to watch for the rest of the session:

  • Resistance(1): 78% Macro Wave Retracement, 25101
  • Support(1): Daily SMA, 24587
  • Support(2): Bollinger MP, 24585

Bottom Line: The trade recommendation I outlined earlier this week for the September E-mini DOW is still valid. Check it out here.

A crossover is imminent between the Bollinger Midpoint and the Daily SMA. This is a fairly important signal that the bear run of June is over and an extended rally toward 25500 is probable. The 78% Macro Wave Retracement (25101) is the area where sellers are likely to make their last stand. If taken out, the daily chart’s Swing High (25418) will be soon to follow.

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