Our expectations suggest a further decline for the index during its upcoming trading.
The Dow Jones Industrial Average declined in its recent trading at the intraday levels to record losses for the second session in a row, by -0.06%, losing about -21.42 points. It then went to settle at the end of trading at the level of 35,089.75, after its decline in trading on Thursday by -1.45%. However, despite the index’s decline in its last two sessions, it succeeded in closing with a second consecutive weekly gain of 1.05%.
Investors focused on the quarterly results of large-cap companies, which helped calm concerns about a more aggressive Federal Reserve after a much stronger-than-expected jobs report in January.
On Friday, the government reported that the US economy added 467,000 jobs in January, and employment was much stronger at the end of 2021 than originally expected. The unemployment rate rose to 4% from 3.9%, while the proportion of individuals in the labor force rose to its highest level since the start of the pandemic, reaching 62.2%.
Economists polled by the Wall Street Journal expected a job rise of only 150,000, and some warned of a possible drop because hourly workers without paid sick leave are not counted as jobless. Analysts said investors were prepared to consider a weak number amid expectations of a sharp reversal in February.
Meanwhile, Amazon shares rose about 13%, after the e-commerce giant reported strong quarterly earnings results late Thursday. About $11.8 billion of last-quarter earnings of $14.3 billion were from an investment in Rivian Automotive, which went public this quarter.
Technically, the index declined because of its collision with the resistance of its simple moving average for the previous 50 days. This exposed it to negative pressure to base its recent trades on a major ascending trend line that the index had crossed earlier, as shown in the attached chart for a (daily) period. Therefore it is not a support for the strong trend, especially with the start of negative crossover on the RSI indicators, after reaching overbought areas.
Therefore, our expectations suggest a further decline for the index during its upcoming trading, if the resistance level remains at 35,982.69, to target the pivotal support level 34,006.98.
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