March E-mini Dow Jones Industrial Average futures closed higher for a third straight session on Thursday, putting the market in a position to challenge the more-than-one-month-high reached the previous week.
The rally was fueled by a combination of easing fears over the impact of the Omicron coronavirus variant on the economic recovery and strong U.S. economic data although high inflation remains somewhat of a concern.
On Thursday, March E-mini Dow Jones Industrial Average futures settled at 35832, up 200 or 0.56%. Volume was on the light side ahead of the holidays and extended long weekend in the United States.
Positive news on the efficacy of vaccines on the Omicron variant helped fuel investors’ appetite for risk after two vaccine makers said their shots protected against Omicron. Additionally, U.K. data suggested the variant may cause proportionally fewer hospital cases that the Delta variant, though public health experts warned the battle against COVID-19 was far from over.
In economic news, data on Thursday showed the number of Americans filing new claims for unemployment benefits held below pre-pandemic levels the week-ending December 17, while consumer spending increased solidly, putting the economy on track for a strong finish to 2021.
However, price pressures continued to build, with a measure of underlying inflation recording its largest annual increase since 1989 in November.
Short-Term Technical Outlook
Despite the strong three-day rally, the main trend is down. The trend will change to up on a trade through 36098. This is the last potential resistance before the November 16 main top at 36153 and the November 8 all-time high at 36330.
The minor range is 36098 to 34547. The market is currently trading on the strong side of its retracement zone at 35506 to 35323, making it support.
The short-term range is 33860 to 36098. Its retracement zone support is 34979 to 34715.
The main range is 33300 to 36330. Its retracement zone at 34815 to 34457 is the major support area controlling the direction of the market. It stopped the selling last week at 34547 on December 20.
The momentum into the close on Thursday despite low pre-holiday volume could continue early Monday when some of the lost volume is recovered. This makes 36098 – 36153 easy upside targets.
The failure to follow-through to the upside could trigger a break into 35506 to 35323. Buyers could return on a test of this area.
A sustained move under 35323 will be a sign of weakness. If the selling pressure gains traction then the break could extend into 34979.