- In my analysis of major indexes around the world, I always look at the Dow Jones 30 in the United States, as it is the leading blue-chip index there.
- Another reason to pay close attention to the Dow Jones 30 is that it is made up of 30 equally weighted stocks, so it gives you a slightly clearer picture of what stock traders are thinking.
- This is in stark contrast to something like the NASDAQ 100 versus the S&P 500, which of course use volume-based metrics to give different weights to each individual stock.
Friday was a good day
The reason I say Friday was a good day is not necessarily because it was positive, although of course it was, it has more to do with the fact that Friday was a relatively relaxed and somewhat positive day. That’s exactly what you want to see after that session on Thursday, and it suggests that maybe we’re starting to see a little more liquidity in the market jump, which of course you would expect. That being said, the market is likely to still be a bit thin as far as liquidity is concerned until the end of next week. However, the market is also likely to react to the release of non-farm payrolls on Friday. Once we get through that, then I think things start to bounce back, that the replica has returned to some sense of normalcy.
If we turn around and break above the 50-day EMA to the upside, it means we will set up a good underlying pattern to continue going higher. As a reminder, the Dow Jones 30 has fallen significantly, especially relative to its peers, over the past month. Because of this, if the Dow Jones 30 were to move higher, it would be a very good sign for US stocks in general. That said, even if you don’t want to trade this index, it’s definitely worth paying attention to.
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