Risk on: Dow Jones passed 25000

Risk on: Dow Jones passed 25000

2020-05-27 • Updated

A great chance to make profit on stocks! Investors are inspired by economic reopening and optimistic vaccine news.

The market is leaded by sectors that have been left aside for a long time. This is easier to notice, if we look at stock indexes. Dow Jones has showed the largest gain today among its brothers. It rose by 1.4%. For comparison, the high-tech Nasdaq increased only by 0.6%. What’s the reason?

Positive vaccine news from Merck

The biotech giant and also the Dow Jones’s component, Merck&Co., announced two important collaborations. The first one is with IAVI, a scientific research organization. They have already started developing a COVID-19 vaccine. They use very promising recombinant vesicular stomatitis virus (rVSV) technology, that has worked effectively for the Ebola’s vaccine. The second co-operation is with Ridgeback Biotherapeutics. All together they have started working on an antiviral drug for infected people. The Dow Jones index surged immediately after the announcement.

Most businesses are reopening

Another significant Dow Jones’ component, McDonald’s, was hit hard by the coronavirus even with its take-away service and deliveries. Now the situation gets better day after day as restaurants have started reopening. The fast-food restaurant takes all measures to make it safe for both employees and consumers. Obviously, it will take time to return to pre-virus sales as people need to feel comfortable to visit McDonald’s. However, the worst seems to be over now.

Technical outlook

Let’s look at the chart that represents Mini Dow Jones Futures, which will expire in June. Don’t be confused, mini futures show a portion of standard ones. They are just an accessible alternative, that allows anyone to trade the classical Dow Jones. Mini contracts are electronically traded and offer exposure to the 30 US blue-chip companies, the same ones that presented in the stock index. 

The price had declined significantly with the coronavirus outbreak and then reversed on March 23. It’s climbing up and up. Today it has even crossed the 100-day moving average and reached February highs. Doors are open for the next retracement level at 26,800. Support levels are at 24,090 and 22,900. Consider buying it, while the market is risk-on!

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The views here are solely based on Technical Analysis techniques using my personal Smart Money approach. Hence, it is important to understand that the trading of CFDs comes at a risk; if not properly managed, you may lose all of your trading capital. To avoid costly mistakes while you look to trade these opportunities, be sure to do your own due diligence and manage your risk appropriately.

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