Three reasons for the rise in the Dow Jones [Video]

In today’s Market Outlook, let’s take a look at Forex trading on the Nikkei, the Russell 2000, the NASDAQ, the DJIA, the S&P 500, Silver, XAGUSD, Gold, XAUUSD, Brent and WTI Crude Oil.

Much of what we trade is based on sentiment, rumours and fear in the markets.

We can see this in the price action of crude based on the war in Iran.

This fragile peace is still driving other markets, but the fall in the price of oil falling is based on the data.

Basically, more ships are passing through the Strait of Hormuz WITH their GPS turned on for the first time in weeks, which is a very positive sign.

The traffic is not back to normal, but the positive moves are driving prices lower, and we see pre-war levels at about $65 and $60 as the next key levels.

However, please pay attention to the news.

This could change at any moment.

Speaking of falling, the price of gold has broken the $4,000 level, and we see the next key level below at $3,900.

Silver is following gold, and we see key levels below at $54 and $47.

Looking at the US indices, we note that every index is reacting differently, and this can create opportunities, but let’s look at why they are different.

We see that the NASDAQ is down overall, and this is based on pessimism in the overvaluation of AI and tech companies.

The great results from Micron helped yesterday, but not enough, obviously, even with its 5 to 6% weighting on the NASDAQ.

Micron is only weighted at less than 2% on the S&P500 and therefore had little impact on the overall index.

Just like the NASDAQ, the S&P has been held back by tech pessimism.

Also, many tech and AI companies have added hugely to their debt with bond issuances, and this can affect investor confidence for many reasons.

The Dow Jones Industrial Average is completely different, as the top 30 companies in the US will benefit hugely from the falling price of crude oil.

Also, if investors are selling and taking profit from tech stocks, they will invest in blue-chip companies like those on the Dow Jone.

And, very importantly, the Dow Jones Industrial Average is share price weighted, not market cap weighted, so we often see more exaggerated movements in both risk-on and risk-off moods.

And finally, on the Russell 2000, we saw the biggest rise, as many of these 2000 small-cap companies are customers of the Dow Jones companies and investors, perhaps reallocating their tech investments.

The Russell could, in fact, move higher if the Fed indicates that they may not have to raise rates this year, but we will be watching that.

Asian indices are positive based on the Micron earnings report, a renewed risk-on attitude to tech and AI, so we may see a reversal of attitude soon in other parts of the world.