Dow Jones Price Outlook:
- Earnings season has begun and the Dow Jones will await reports from some of its key components
- Technical resistance overhead may look to keep the Dow contained in the meantime
- In addition to corporate earnings, ongoing stimulus talks might create volatility for the Dow
Dow Jones Price Forecast: Earnings and Stimulus to Dictate Direction
The Dow Jones began October in commanding fashion as it ripped higher and recovered of the ground it forfeited in September. Now with gains slowing and uncertainty on the horizon, the Dow could struggle to retake prior highs. With discussions of stimulus ongoing, upcoming earnings reports from key Dow members and a looming Presidential election, the Industrial Average might be headed for a volatile period – regardless of direction.
To that end, upcoming earnings from Coca Cola and Intel might be two early opportunities for single stocks to contribute volatility to the Dow Jones Industrial Average. On a broader scale, an eventual stimulus bill might help boost the entirety of the Dow as blue-chip stocks look to benefit from the intended boost to the underlying economy. As it stands, work-from-home stocks continue to outperform many of their counterparts that are more vulnerable to weakness in a traditional economic model.
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That said, earnings from Netflix might hint the boost enjoyed by some stocks following widespread lockdown measures might be waning. Thus, it will be important to keep an eye on upcoming earnings from quarantine favorites like Lululemon, Zoom, Peloton, Docusign, Pinterest and Twitter – just to name a few. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
Dow Jones Price Chart: 4 – Hour Time Frame (February 2020 – October 2020)
As far as price action is concerned, the Dow looks to be holding between resistance at 28,571 and support at 26,185, at least for the moment. Both levels are derived from the same Fibonacci sequence – the September high and low – and may continue to influence price in the shorter-term. Thus, a break through either of these levels might suggest a continuation in the direction of the break. Either way, heightened volatility seems likely given the considerable event risk on the horizon.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX