The Dow Jones Industrial Average stabilized in its recent trading at intraday levels to achieve slight gains in its last sessions. It gained about 1.39 points only and settle at the end of trading at the level of 35,091.14, after declining in trading on Friday and for the second consecutive session by -0.06%, capping gains for the second week in a row by 1.05%.
Stock markets are still digesting Friday's surprisingly strong employment report, and the European Central Bank's policy shift last week, but traders have one eye on fixed income markets.
Investors continued to digest the implications of the surprisingly strong 467,000 gains in non-farm payrolls in January and looked ahead to the January CPI report. The market is now focused only on one thing and that is inflation.
The next big catalysts are the 10- and 30-year Treasury auctions later this week, and the CPI on Thursday, so in the meantime traders are watching for some pressure on stocks' recent range.
It comes as fourth-quarter earnings season approaches its end with a few major companies yet to announce.
Technically, the index’s decline came after it retested the resistance of a major ascending trend line that the index had broken earlier in the short term, as shown in the attached daily chart. This coincided with touching the resistance of its simple moving average for the previous 50 days. This doubled the strength of that area as a strong resistance to it, which led to those losses. With the start of negative signals in the relative strength indicators, they reached areas that are highly saturated with buying operations. The index surrenders to all those negative pressures and announces the continuity of the control of that bearish corrective wave in the short term .
Therefore, our expectations indicate a decline in the index during its upcoming trading, throughout the stability of the pivotal resistance 36,565.73, to target the pivotal support level also at 33,821.58.
