DJIA index opened higher as traders bet on the strong earnings result

The DJIA index opened higher by more than 200 points today. The bullish sentiment is mostly driven by expectations that companies will beat earnings expectations and put hope on economic recovery. We think the bullish pressure is temporary action before next week’s FOMC meeting. Nearing the FOMC meeting, we expect the market to stay sideways and start to break out of range after the interest-rate announcement.

Technical Analysis

Dow Jones Industrial Average (INDU)

DJIA index opened above the horizontal range and tested the daily SMA 50 yesterday. The test resulted in a bearish reaction and we have a bearish close. It seems the ranging movement between the two trendlines will continue. Traders will wait for a breakout and close outside of the range before deciding on the next direction.

Wendys Company (WEN)

WEN share prices currently trading upward and reversing the bearish trend. The share price is challenging horizontal line where a flip from support to resistance happens. If the share prices could break out then it will target the daily SMA 200. Traders will monitor the share price reaction near both resistance levels. If there is a significant bearish reaction then traders could enter short positions.