Analyze This: Will the Dow Will Soar or Crash in 2024? | ChartWatchers

The Dow Jones Industrial Common ($INDU) might not be the great measure of the US financial system it as soon as was within the early twentieth century. Nevertheless, when you’re holding (or seeking to maintain) a place in a Dow-tracked index fund to diversify into blue chip shares, it nonetheless helps to see the place the index could also be heading.

Analyst Forecasts Are Blended

Analyst worth targets for the Dow present a combined vary as a consequence of numerous financial elements. Let’s undergo every case:

The Bullish Case

Optimistic forecasts have hinged on the hopes for a Federal Reserve fee lower, to which establishments like Goldman Sachs (GS), Citigroup (C), and Financial institution Of America (BAC) have raised their targets in the course of the first half of 2024. There’s additionally lots using on the Tech sector’s energy, to which JPMorgan attributes the rest of the broader market rally this yr (with out it, the JPM analysts forecast a attainable 20% correction).

The very best forecast exhibits the Dow rising to 40,000 in 2024.

The Bearish Case

Nonetheless, JPMorgan analysts are mentioning the probability of a pullback as a consequence of slowing world development, declining family financial savings, and geopolitical tensions. BCA Analysis additionally affords a very bearish outlook, warning of potential market crashes pushed by recession dangers.

The bottom forecast is that the Dow will fall to a minimum of 34,000 by the top of 2024. 

What Do the Technicals Say?

The Dow’s weekly and five-year efficiency exhibit a sustained uptrend. The 50-period easy transferring common (SMA) might have exhibited extra fluctuations than the 200-period SMA, however each have moved steadily upward.

CHART 1. WEEKLY CHART OF THE DJIA ($INDU). Risky, sure, however all upside, it appears.Chart supply: StockCharts.com. For academic functions.

Should you depend on the Chaikin Cash Move (CMF) to precisely symbolize momentum, you may see that the shopping for strain has largely been maintained all through all the five-year interval. Nevertheless, each the CMF and the Relative Power Index (RSI) additionally level to near-term weak point, as indicated by a bearish divergence from worth motion, which additionally seems to kind a double-top sample.

The near-term downward strain is extra pronounced when you have a look at a day by day chart (see under).

CHART 2. DAILY CHART OF THE DOW ($INDU).  If the Dow falls, and it seems to be prefer it would possibly, listed below are the important thing ranges to observe.Chart supply: StockCharts.com. For academic functions.

Missing any compelling constructive (elementary) elements to drive shares greater, it could be secure to imagine transitory softening within the Dow’s trajectory. The bears may push the Dow under the short-term development line (see green-dotted line), which units proper under the 38,500 degree.

Should you’re siding with the bull case talked about close to the highest of this text, the primary stable degree of assist is highlighted by the blue dotted line round 37,000 (under the 38.2% Fibonacci Retracement line). This degree coincides with the 2021 excessive, which the Dow broke above in December 2023.

The subsequent degree of assist, marked by a dotted blue line, sits between the 50% and 61.8% Fibonacci Retracement strains at round 35,700. This degree marks a vital resistance degree examined 3 times—in 2021, 2022, and 2023—earlier than the worth surged previous it final November.

Should you lean extra towards the bearish facet of issues, leaning extra towards the potential 20% broader market correction that JPM warned about, then you definately would possibly see costs fall nicely under the 61.8% Fib retracement line towards the 34,000 degree.

The Takeaway

The Dow Jones Industrial Common (DJIA) might not be the all-encompassing measure of the US financial system it as soon as was, however it’s nonetheless related for these investing in blue-chip shares. Analysts are divided: optimists see the Dow reaching 40,000 by the top of 2024, pushed by hopes for a Fed fee lower and Tech sector energy, whereas pessimists warn of a drop to 34,000 as a consequence of world financial slowdowns and geopolitical points. No one is aware of how financial elements and Fed messaging (loads of Fed speeches this week) will trigger investor sentiment to reply. It is a wait-and-see second. However, on the very least, you now have a couple of key ranges to observe, whichever facet (bull or bear) you end up in.

Disclaimer: This weblog is for academic functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your individual private and monetary scenario, or with out consulting a monetary skilled.