Dow Jones Futures: Coronavirus Stock Market Rally Fights Covid-19 Wave; S&P 500 Bearish Bets Explodes

The Dow Jones futures are trading higher as traders continue to downplay concerns of a new spike in coronavirus cases. Both the S&P500 and Dow Jones futures made a U-turn today and dug themselves out of losses. Beijing appears to have control of its coronavirus outbreak, which called for celebration amongst traders. 

The global stock market is likely to remain vulnerable as countries reopen their economies and loosen travel restrictions. In the UK, the government plans to drop the 2-meter social distancing rules and provide additional guidance on facial masks. The Chancellor of the Exchequer, Rishi Sunak, is expected to reduce the value-added tax rate on the good as an emergency measure next month. 

The market breadth of the S&P500 still suggests that the bull momentum is intact. Bullish momentum is healthy for the precious metal, gold. Gold prices are trading higher as traders remain convinced that the dollar will continue to drop, while the Fed keeps their dovish tone for an extended period. 

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(Photo by Bryan R. Smith / AFP) (Photo by BRYAN R. SMITH/AFP via Getty Images)

AFP via Getty Images

Dow Jones And S&P 500 Futures Today 

The Dow Jones futures are trading higher by 400 points as the DJIA index steadily continues to record more gains. However, traders should note that volume isn’t high, which usually means that the momentum may not last long. On the daily chart, the Dow Jones index has moved below its 200-day moving average. If it can’t keep above the 50-day moving average, the coronavirus stock market rally could be in serious trouble. 

The DJIA index has also moved below its 50 and 100-week smooth moving averages on the weekly chart. This is another bearish signal indicating things are about to take a wrong turn. 

The S&P 500 futures—which offer a better representation of the overall stock market—show that the bulls are still in control of the price because the S&P 500 index is above all the critical 50, 100, and 200-day SMA on a daily time frame. 

DJIA chart. The Dow Jones. The Dow Jones futures chart confirms weakness for stocks

DJIA chart. Dow Jones futures show weakness as the price has dropped below its 50 and 100-week … [+] smooth moving average. The Dow could be in trouble and so the stock market rally


Stock Market Rally 

The US stock market rally reversed its gains on Friday and closed with mild losses. The speculative position net non-commercial future positions have increased their net short positions on the S&P 500 stocks. So, it looks like this group of speculators is expecting more pain for the stock market. 

NASDAQ stocks climb and Dow Jones industrial average also rises

The Dow and NASDAQ stock chart. The Dow Jones and NASDAQ weekly gains. The DJIA index is losing bull … [+] momentum. The NASDAQ index is still holding on to gains due to FANG stocks

AvaTrade, Bloomberg

The negative outlook fits as the Dow Jones posted minimal gains over the last week. The NASDAQ NDAQ index led the gains last week, followed by the S&P 500. The Dow Jones industrial average was the worst performer.

The S&P500 stock index may fall

The S&P 500 stocks may decline. The S&P 500 index shows speculators have increased their short bets. … [+] This could be due to the rise in coronavirus cases

AvaTrade, Bloomberg

The S&P500 index closed down by 0.56%, and the Dow Jones industrial average sank by 0.80% yesterday. Utility stocks pulled the S&P 500 index lower, and 10 out of 11 sectors showed losses. The S&P 500 is trading at a price-to-earnings ratio of 21.7 on a trailing basis, which makes the index somewhat expensive. The 30-day price volatility declined to 27.41 percent against the previous value of 27.65%, while the average for the past month is 25.43%

 The tech index, NASDAQ closed above the 10,00 mark, but still recorded a tiny loss of 0.03%.  

Coronavirus: “Tongue in cheek.” 

In Oklahoma, Trump called virus testing as a “double-edged sword” and urged the medical community to “slow the testing down.” White House trade adviser Peter Navarro told CNN that the statement was “tongue in cheek.” Testing is the most critical step in fighting the pandemic, in my opinion, and slowing down this process is like inviting an enemy to live in your house. For traders, coronavirus has become the biggest foe of economic growth. Therefore to restart the economy, we need to hunt it down through testing and then kill it. 

US coronavirus cases have continued to rise. In Florida, new coronavirus cases surged more than the national weekly average, and the situation looks even grimmer in Texas. According to John Hopkins university’s data, there are over 2.27 million infected in the country, and the number increased by 27, 476 last week. New York had 664 new cases, and New Jersey recorded a 0.2% increase in cases. There has been an increase in coronavirus cases in Germany and Brazil remains the hot spot. Beijing reported significantly lower levels of newly infected, and it appears that the situation may be under control. 

 Trump News: John Bolton Slams A Trump Second Term 

John Bolton, President Trump’s longest-serving national security advisor, believes that four more years of Trump would be unhealthy for the United States. In his opinion, the upcoming US election could act as the last “guardrail” to save the country from a second term. US elections are approaching fast, and President Trump is determined to remain in office. Should Trump be re-elected, it’s pretty much a given that he will ramp up spending over the next few years to stimulate growth without examining the effect this may have on the national debt.

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