American rescue plan announced but stock market set to slide

The stock market reacted positively yesterday as Biden announced his stimulus plan named “American rescue plan”. However, the bullish movement only short-lived and the market turned lower at the end of the day. The rising 10-year treasury yield was the major cause of the current bearish sentiment. If the yield continues to increase then it might hinder the Fed commitment to fully-back the economy.

Rising yield could push the Fed to limit the asset purchase policy and start tightening on interest-rate. Despite the situation, we think a bearish pullback in the stock market is due and it is a normal reaction for now.

Asian & European Stock market

The Asian stock market slightly lower today. Japan stock market down 179.08 points (-0.62%) to 28,519.18, China stock market up 0.47 points (+0.01%) to 3,566.38 and Australia ASX 200 up 0.10 points (+0.00%) to 6,715.40. The European stock market retreat on recovery doubt. DAX Germany down 0.89%, UK FTSE down 0.76%, and Euro Stoxx600 down 0.74%.

Technical Analysis

Dow Jones Industrial Average (INDU)

DJIA continues printing new record high even though the market mostly silent for this week. It seems the market is waiting for an announcement from the fundamental side on Biden’s future policy. Aside from that, the earnings season just started.

Today, the DJIA expected to make a pullback and target correction toward 30,000.

Visa Inc (V)

V share prices gained bearish momentum on its correction. The share prices looks will reach the daily SMA 200 or the bottom trendline. When the share price reaches the target and formed a bullish reaction then traders could consider entering long positions.