Recovery or gathering? Federal Reserve holds the key

The main American indicators organized an impressive recovery on Friday, as Dow Jones Industrial External (DJI) turned one step away from the official correction territory (-10 % peak). When doing this, the American economy is heading to recession if the theories formulated by the founder’s founder and the first editor of the Wall Street Journal.

In his theory, Charles Dow pointed out that the direction of the industrial index is correct if the dynamics of the transport sector are confirmed. However, since its peak in late November, the DJTA index lost nearly 20 %, which faster decrease three weeks ago. The rapid decrease has led to the formation of the “death cross”, which is a declining market signal when the average average of 50 days decreases without the moving average for 200 days.

Conditions for sales accumulated in shares over the past three weeks indicate a great opportunity to apostasy, but for how long this apostasy will lose a force based on monetary policy and incoming data.

DJI fell to 25 on the RSI index last week. This is a front area where there was a reflection to the upward trend in October 2023 and September 2022. However, this technology can be broken or confirmed by the market’s reaction to the FOMC meeting later in the week.

It is within the power of Powell and Co to break the mature start of recovery by softening the comments tone and promises more discounts in prices soon. In this case, the market will be in an attractive position for buyers, who can launch a global gathering towards new levels above 45,000.

However, the negative risks are largely equivalent. Since Trump’s presidential victory, Powell has significantly stressed his tone: the tariffs of definitions have a supportive effect of inflation and work even with expectations. On Friday, a jump does not help inflation expectations to the highest level of 2.5 years recorded by the University of Michigan.

Monotheism and apostasy in the indicators are very fragile now. Without supporting the Federal Reserve, it can take the sales process quickly threatening rates, which leads to the liquidation of long situations and margin calls that can quickly send the index to 36000.