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U.S. equity index futures decline: Nasdaq 100 off ~1.2%
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Euro STOXX 600 index down ~0.1%
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Dollar edges up; crude gains; gold, bitcoin slip
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U.S. 10-Year Treasury yield rises to ~3.89%
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DOW INDUSTRIALS: GLASS CEILING OR GLASS FLOOR? (0900
EST/1400 GMT)
The Dow Jones Industrial Average , which ended Friday
at 33,827, has essentially gone sideways for more than three
months.
With this, a daily historical volatility measure has now
collapsed to its tightest reading since early-September 2021.
Thus, the blue-chip average appears especially ripe for much
more spirited action, or indeed, a next trend:
Daily Bollinger Band (BB) width has compressed to 0.0207 or
its lowest reading since 0.0205 on September 7, 2021.
Including the September 2021 low, and prior to the current
print, the DJI has seen five sub-0.0400 BB width troughs (four
which preceded declines and one which preceded a rally).
The average immediate decline was as much as 6.2% over the
next 12 trading days. The rally was 6.4% over the next 18
trading days.
Low BB width does not in itself predict direction, and it
could become more compressed. However, with e-mini Dow futures suggesting more than 300 points of downside pressure at
Tuesday's open, the DJI looks poised to test its lower daily BB,
which ended Friday at around 33,570.
In the event the Dow closes below this line, coupled with a
BB width rise, a more sustained downside flurry may ensue.
The DJI has support at its December 22 low of 32,573. The
200-day moving average (DMA) ended Friday around 32,345.
If the DJI can reverse back above its 20-DMA, which should
be around 33,950 on Tuesday, it can instead tilt the blue-chip
average toward an upside range breakout.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
