Dow Jones bouncing against the EMA(200) – a push back below 25,000 ahead?

Juni 01, 2020 12:00

Source: Economic Events June 1, 2020 - Admiral Markets' Forex Calendar

While European Equity markets will likely see a very slow start into the trading week, the picture in US Equities is getting more and more very interesting.

The Dow Jones has seen a remarkable run from its March lows, gaining more than 35% since then. That corrective move resulted in US stocks now trading at over 143% market cap to US GDP and a forward Price-Earnings ratio of higher than 24.

The latter fact, in particular, seems a little too optimistic given the expected economic downturn in the months to come after the Corona lockdown.

In addition to that, last Friday's press conference from US president Donald Trump let fears of new tensions between the US and China grow once again, after the U.S. has taken a more serious turn in response to a Chinese security law that threatens the long-standing independence of Hong Kong.

With the Dow Jones failing to recapture the EMA(200) (blue) on a daily time-frame last week, the line-up for a sharper corrective move and short-term pullback below 25,000 points seems given and short-term Short engagements seem, in our opinion, attractive from a risk-reward perspective:

Source: Admiral Markets MT5 with MT5-SE Add-on DJI30 CFD Daily chart (between March 18, 2019, to May 29, 2020). Accessed: May 29, 2020, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of the DJI30 CFD decreased by 2.2%, in 2016, it increased by 13.5%, in 2017, it increased by 24.4%, in 2018, it decreased by 5.9%, in 2019, it was up by 23.8%, meaning that after five years, it was up by 60.1%.

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