LIVE MARKETS-Dow Industrials: Tries to swing for its highs

· 02/05/2021 10:19
LIVE MARKETS-Dow Industrials: Tries to swing for its highs

S&P, Dow up modestly; Nasdaq closer to flat, small outperforms

Energy leads S&P sector gainers; tech, financials in the red

STOXX 600 down ~0.2%

Dollar falls; gold, oil rise

U.S. 10-year Treasury yield ~1.14%

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The Dow Industrial's .DJI violent swings from its January 21 high into its January 29 low now appear to have been a corrective pattern on the charts. nL1N2K91DE

Indeed, on Thursday, the blue-chip average was able to overwhelm a short-term resistance line and exceed Tuesday's high. With that thrust, the index is now challenging its 31,188.38 record-high close/31,272.22 record-intraday high:

Additional hurdles can be found at monthly log-scale resistance lines from late 2018, now around 31,500, and 1929, now around 33,000. These barriers are 0.7% to 5.5% above the record intraday high.

Of note, despite the recent weakness, the Dow is on track for a 4th straight higher monthly low. This, even though the Nasdaq Composite .IXIC nL1N2KA154, and the NYSE Composite .NYA nL1N2K218U, may have cracks under the surface. Therefore, a Dow reversal below January's trough at 29,856.30 may add to any renewed negativity.

Meanwhile, despite the Dow flirting with record highs, its monthly RSI is failing to confirm the move. Although rising, this study remains shy of its 2020 and 2019 tops, and well below its 2018 highs.

In fact, given the Dow's swings since early 2018, the oscillator has been unable to muster enough strength to end a month above the overbought threshold (70.00) for more than 2 years. Protracted stretches of monthly RSI divergence have preceded significant periods of Dow nL1N2JI1FF and S&P 500 .SPX nL1N2K7193 instability.

(Terence Gabriel)



A Dream of Spring is expected to be the last novel of George R.R. Martin's epic fantasy saga which was adapted to the screen in HBO's Game of Thrones.

A lot of the action is set during a winter which lasts for years and during which an army of zombies march through the civil war-torn continent of Westeros, a fictitious land which looks very much like a map of Great Britain and Ireland turned upside down.

Granted, COVID-19 isn't on the same scale as a horde of living dead in terms of catastrophes but the UK would also be entitled to dream of spring as it battles through a most deadly winter.

And hope there is!

"Beginning with schools and non-essential shops, we expect the UK to start the stepwise reopening process by mid-March", Berenberg's team of economists said in note looking into the prospects of the UK economy going back to normal.

There's been a lot of good news lately: the lockdown is working and "based on the recent five day average, recorded infections could be at summer 2020 levels within two weeks".

That good trend comes as Britain is emerging as one of the most successful countries in vaccinating its population with hopes that 15 million people most at risk will have had a jab in the arm come mid-February.

Spring in itself should also help fight the pandemic with "the normal remission of seasonal respiratory viruses" according to the research note.

Looking further ahead, it gets even better as the vaccine rollout continues to do its thing.

"By summer, almost all of the economically significant restrictions are likely to be lifted – perhaps with some exceptions such as public events at full capacity", the Berenberg team of economists believe.

Here's Berenberg's chart showing how infections are expected to drop going forward:

(Julien Ponthus)



S&P e-mini futures EScv1 are pointing to a higher open on Friday as Democrats pushed ahead with their plans for approving COVID-19 stimulus and data showed January jobs growth was slightly below expectations and prior month revisions were on the bleak side.

Indeed, U.S. employment growth rebounded slightly less than expected in January and job losses the prior month were deeper than initially thought, strengthening the argument for additional relief money from the government to aid the recovery from the COVID-19 pandemic. nL1N2KA34D

While rising wages and average work week indicated to Sameer Samana, senior global market strategist at Wells Fargo Investment Institute that things may not be as bad as they seem, he also pointed to a need for government support.

"Job growth slowed markedly in January, and the previous two months’ revisions were also to the downside. It is worth noting that the unemployment and underemployment rates both fell, however some of that may be due to a decrease in the participation rate," said Samana.

"These data points show that the labor market has softened in the past few months and the need for fiscal stimulus remains high."

The U.S. House of Representatives will vote on Friday on final passage of a budget resolution that would allow Democrats in Congress to approve President Joe Biden's $1.9 trillion COVID-19 relief package without Republican support, a Democratic leadership aide said. nL1N2KB170

Here is your premarket snapshot:

(Sinéad Carew)



Wall St points to higher open

dream of spring


(Terence Gabriel is a Reuters market analyst. The views expressed are his own)