April 17, 2024

Should You Buy Dow Jones Following +20% Surge Over Last Two Months?

  • Investor risk appetite hit all-time lows this year.
  • Dow Jones gained 20.4% within the last two months.
  • The upside move doesn’t mimic a bearish market rally.

Financial markets responded cheerfully to Fed Chair’s comments during yesterday’s Brooking Institution meeting. However, we cannot conclude that the Fed is accountable for the stocks’ uptick. For example, TradingView’s chart shows 2022’s price action.

The index hit a new ATH early this year before a bearish trend emerged. Nevertheless, it bottomed in October. Furthermore, Dow Jones gained 20.4% within the last two months. That makes Thursday’s 1000 points upsurge irrelevant.

Moreover, the market was soaring from the recent lows, and yesterday was only another bullish day for the space. That means stocks expected the Federal’s turning point for some time. Thus, yesterday’s rally didn’t surprise market participants, as the market has rallied for over sixty days.

Is It a Bearish Market Rally?

Unlikely, for multiple reasons. First and foremost, the Dow is near a new ATH. It has regained most of its 2022 losses. Secondly, December isn’t the month to fight the stock market. There’s no economic event to move the market after mid-month. Thus, ascending higher remains more likely.

Thirdly, the dollar has weakened, meaning the stock market surge isn’t singular, as there’s an overall market volume. Fourth, the past months have seen inflation cooling. Recent reports from Europe and the US show the prices of services and goods plummeting. Lastly, investor risk appetite hit all-time lows this year.

Stocks continue to soar from October lows, and further gains are possible in December.

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