Tax cuts and faster economic growth could hike company earnings and investors are waiting for another Dow Jones rally. Will the Dow Jones hit 21000 levels? Here is my technical analysis for the Dow Jones Industrial Average.
23 February, AtoZForex – The Dow Jones Industrial Average surged 0.16 percent to 20,775.60 up 32.60 points on Wednesday trading session. The Dow Jones is about to touch the 21000 level very soon. But, even if the Dow Jones reaches 21000 in President Donald Trump’s first term, the trajectory wouldn’t be a straight line. Moreover, this is happening at a time when the stock market has arranged a successful breakout of low volatility since the election.
Will the Dow Jones hit 21000 levels?
Now the question arises among the investors about the Dow Jones rally but the biggest single factor in the long-term perspective of stocks is earnings growth. If the US GDP growth accelerates to 4% then the Dow Jones will reach as high as 22500 by the end of Trump’s first term. But the Donald Trump might not be able to execute his promises and he might start a trade war. Another risk is that the Federal Reserve ends up raising interest rates too quickly which affect company earnings.
Even if the Dow Jones reaches 21000 in Trump’s term, the trajectory could not be a straight line. The chart below shows that the current breakout is happening on low volume.The Relative Strength Index (RSI) is overbought and showing divergence from price action. If the Dow Jones manages another rally, there would be a high volatility in the market. As the SMA 200 line is below the SMA 100 lines which mean a buy at this level. But some of the indicators are showing an overbought signal so, the investor should wait till another dip.
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