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Thursday, January 21, 2021

Dow Jones, S&P 500 and Nasdaq Composite advanced on a weekly basis

  • DJIA, SPX and Nasdaq weakened on Friday but advanced on a weekly basis
  • The US added 661K new jobs in September, much worse than the 850K expected
  • The US President Donald Trump contracted COVID-19
  • DJIA, SPX and Nasdaq remain in a bull market

The US stock market weakened this Friday pressured by the news that US President Donald Trump has contracted COVID-19 and data showing a slowdown in recovery in the battered US labor market. The Dow Jones Industrial Average fell almost 0.5% while the Nasdaq Composite dropped 2.2%, capping the week up nearly 1.5%.

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The Standard & Poor’s 500 weakened about 1% to close out the five-day period 1.5% higher. According to the official release, the US added 661K new jobs in September, much worse than the 850K expected.

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The positive news is that the unemployment rate in the same period ticked down to 7.9% from 8.4%.

S&P 500 up 1.5% on a weekly basis

S&P 500 (SPX) rose 1.5% this week which is the first weekly advance since August, as the real estate sector, financials and utilities led a broad climb.


sp 500
Data source: tradingview.com

When we take a look at the chart above ( one year period), we can see that the S&P 500 has advanced from 2,191 points to 3,588 and after that started to fall. As long the price is above this trend line this index is in the “buy” zone and there is no indication of the trend reversal.

If the price falls on the trend line and if we get a “bullish” confirmation candle it would be a very good entry point for short-term traders who are trading with “stop-loss” and “take profit” orders. The trend line represents a very strong support level, if the price breaks this trend line it would be a very strong “sell” signal and we have an open way to 3,000 points ( this is also a strong support level).

If the price jumps above 3,400 (short-term resistance level) that would be a confirmation of the “bullish” trend and open way to 3,500 or even 3,600 points.

DJIA up 1.9% on a weekly basis

For the week, The Dow Jones Industrial Average (DJIA) booked a 1.9% increase and closed at 27,682 points. The Dow Jones Industrial Average fell almost 0.5% this Friday pressured by the news that President Donald Trump has contracted COVID-19 and data indicated that the labor market recovery is slowing.


djia
Data source: tradingview.com

On this chart, I marked important resistance and support levels. The important support levels are 26,000 and 25,000 points, 29,000 and 30,000 points represent the resistance levels. If the price jumps above 29,000 points it would be a buy signal for Dow Jones Industrial Average (DJIA) and we have the open way to 30,000 points.

Rising above 30,000 points supports the continuation of the bullish trend and the next price target could be located around 30,111. On the other side, if the price falls below 25,000 points it would be a strong “sell” signal and we have the open way to 23,000 points.

Nasdaq Composite up 1.5% on a weekly basis

For the week, the The Nasdaq Composite (COMP) booked a 1.5% growth and closed at 11,075 points.


nasdaq composite
Data source: tradingview.com

When we take a look at the chart above ( one year period), we can see that the Nasdaq index has advanced from 6,631 points above 12,000 and after that started to fall. As long the price is above this trend line and 10,000 points this index is in the “buy” zone and there is no indication of the trend reversal.

If the price falls on the trend line and if we get a “bullish” confirmation candle it would be a very good entry point for short-term traders who are trading with “stop-loss” and “take profit” orders. The trend line represents a very strong support level, if the price breaks this trend line it would be a very strong “sell” signal and we have an open way to 10,000 points ( this is also a strong support level).

If the price jumps above 12,000 resistance level that would be a confirmation of the “bullish” trend and open way to 12,200 or even 12,500 points.

Summary

Concerns about sluggish economic growth amid the ongoing pandemic continue to dominate the financial markets. The US stock market weakened this Friday pressured by the news that US President Donald Trump has contracted COVID-19 and data showing a slowdown in recovery in the battered US labor market. According to the official release, the US added 661K new jobs in September, much worse than the 850K expected. Despite this, Dow Jones, S&P 500 and Nasdaq Composite advanced on a weekly basis and remain in a bull market.

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