Dow Jones, S&P 500 and Nasdaq Composite remain in a bull market

Concerns about sluggish economic growth amid the ongoing pandemic continue to dominate the financial markets. The Dow Jones Industrial Average (DJIA)  and S&P 500 indices had their fourth straight weekly declines, the longest weekly losing streak since August 2019. 

The Nasdaq Composite index advanced on a weekly basis after falling the previous three. U.S. indices are also pressured by the fact that Congress will not approve additional fiscal stimulus.

“We think it is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution. This implies that after a final round of extra unemployment benefits that are currently being disbursed, any further financial support will likely have to wait until 2021,” analysts said.

Despite this, there is no reason to panic and all three indices still remain in a bull market.

S&P 500 down 0.6% on a weekly basis

S&P 500 (SPX) had its fourth weekly drop in a row and closed the week around 3,298 points. S&P 500 is pressured by uncertainty about additional coronavirus stimulus from Washington, rising cases of coronavirus and a stall-out in some components of economic data.

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 3,500 (short-term resistance level) that would be a confirmation of the “bullish” trend and open way to 3,600 or even 3,700 points.

DJIA extends losses

The Dow Jones Industrial Average (DJIA) had its fourth straight week declines, the longest weekly losing streak since August 2019. For the week, the Dow booked a 1.8% decline and closed at 27,174 points.

Data source: tradingview.com

On this chart, I marked important resistance and support levels. The important support levels are 2,600 and 2,500 points, 2,900 and 3,000 points represent the resistance levels. If the price jumps above 2,900 points it would be a buy signal for Dow Jones Industrial Average (DJIA) and we have the open way to 3,000 points.

Rising above 3,000 points supports the continuation of the bullish trend and the next price target could be located around 3,111. On the other side, if the price falls below 2,500 points it would be a strong “sell” signal and we have the open way to 2,300 points.

Nasdaq Composite up 1.1% on a weekly basis

The Nasdaq Composite (COMP) avoided a fourth consecutive weekly loss and closed the week in green. For the week, the Nasdaq booked a 1.1% growth and closed at 10,913 points.

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 11,000 (short-term resistance level) that would be a confirmation of the “bullish” trend and open way to 11,500 or even 12,000 points.

Summary

Concerns about sluggish economic growth amid the ongoing pandemic continue to dominate the financial markets. The Dow Jones Industrial Average and S&P 500 had their fourth straight weekly declines while the Nasdaq advanced on a weekly basis. U.S. indices are also pressured by the fact that Congress will not approve additional fiscal stimulus. Despite this, there is no reason to panic and all three indices continue to trade in the “buy” zone.

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