The Dow Jones index continued its bullish trend as investors remained greedy. It rose to a high of $33,000, which was the highest level since August. The index jumped by more than 14% in October, its best monthly performance in more than three decades. Meanwhile, the fear and greed index moved to the greed area of 58.
Fed decision ahead
The main catalyst for the Dow Jones was the rising expectation that the Federal Reserve will start pivoting soon. Many investors believe that the Fed will either slow its rate hikes to observe the impact of its recent rate hikes. For one, cracks have started to emerge in the housing market.
Still, other analysts believe that the Fed will continue hiking interest rates in the coming month. On Monday, analysts at Goldman Sachs said that the bank will continue hiking interest rates in the coming months since inflation is still elevated.
This view was shared by analysts at UBS and Bank of America. And in a statement, Larry Summers, who accurately predicted the soaring inflation, urged the Fed to keep hiking interest rates. Therefore, there is a likelihood that the Fed will assert its hawkish view when it concludes its two-day monetary policy meeting on Wednesday.
The Dow Jones index has rallied as investors get greedy in the market. Most sub-indexes are in the greed level, including put and call options, stock price breadth and stock price strength. The VIX index is at the neutral point while the safe haven demand has risen to the extreme greed level.
Dow Jones forecast
The four-hour chart shows that the Dow Jones index has staged a strong comeback in the past few weeks. As it rose, the index surged above all moving averages. It also rose above the important resistance level at September 12. The index also rose above the key level at $32,500 while the Relative Strength Index (RSI) jumped to the overbought level.
Therefore, while the overall trend is bullish, there is a likelihood that the index will retreat after the Fed decision If this happens, it will likely drop to the support at $31,000. A move above the resistance at $33,500 will invalidate the bearish view.