The Bullish Momentum Continues: S&P 500 and Dow Jones on the Rise
- S&P 500 and Dow Jones saw continued growth, fueled by strong earnings reports.
- President Trump unveils a major AI investment initiative named Stargate.
- Dow Jones has surged approximately 6% since January 13, nearing overbought levels on the RSI indicator. Is it time for a market pause?
- Earnings season marches on with upcoming reports from GE Aerospace, American Express, and Verizon.
President Trump’s AI Push + Earnings Season
President Trump’s announcement of the Stargate initiative, a collaboration between OpenAI, SoftBank, and Oracle, has set the stage for a massive AI investment drive. With an initial $100 billion investment and potential total investments reaching $500 billion over the next four years, this venture aims to revolutionize AI infrastructure.
The joint venture was officially introduced at the White House by key figures including OpenAI’s CEO Sam Altman, Oracle’s Chairman Larry Ellison, and SoftBank’s CEO Masayoshi Son. While there are some questions regarding funding, the market responded positively with Oracle’s stock climbing by 10%.
The positive sentiment extended to US Indices, with the S&P 500 and Dow Jones marking gains of 0.6% and 0.95% respectively. The news of Stargate, combined with robust earnings releases, including a standout performance from Netflix, fueled the market’s upward trajectory.
The Road Ahead
As earnings season unfolds, GE Aerospace is set to report pre-market, followed by reports from American Express and Verizon. The impact of President Trump’s policies on the market will be closely monitored, especially as the February 1 deadline for potential tariffs approaches. While the delay in tariffs has eased market concerns, the reaction to upcoming events remains uncertain.
Technical Analysis – Dow Jones
The Dow Jones index has shown a strong rally since mid-January, with a notable 6% gain. Bullish momentum has been evident, supported by a break in structure and a series of higher highs. However, the index is approaching overbought territory on the RSI, indicating a potential need for caution.
Despite the technical indicators suggesting a possible retracement, the fundamental landscape remains favorable for the bulls. Immediate resistance levels stand at 44451, with a breakthrough potentially leading to a retest of the all-time high above 45000. In the event of a pullback, support levels are identified at 43400, followed by 42764 and 42446.
This analysis points to a predominantly bullish outlook for the Dow Jones in the near term, with potential short-lived pullbacks expected. However, external factors such as earnings reports or Federal Reserve announcements could introduce volatility.
In conclusion, the combination of positive earnings releases, President Trump’s AI initiative, and overall market sentiment suggests a continued upward trajectory for US stocks. Investors should remain vigilant and monitor key developments to navigate potential market fluctuations effectively.