Dow Jones Forecast: The DJIA Loses Ground Ahead of the NFP Release

The Dow Jones (DJIA) has broken below the 50-period SMA at the 43,000-point level, raising the possibility of a new short-term bearish trend.
Low employment expectations have increased market indecision and intensified bearish pressure ahead of the NFP release.

Dow Jones dropped over 2% during the last trading week, falling from the peak of 43,400 recorded in late December 2024. Selling pressure remains stable as the market anticipates an economic slowdown in the U.S. and a weaker update in employment data expected to be released tomorrow.

Non-Farm Payrolls (NFP)

The key monthly data (NFP) is due tomorrow at 8:30 am EST, with an anticipated average increase of 160,000 jobs in December, below the 227,000 jobs reported in November. The official unemployment rate is expected to remain at 4.2% for December, the same as recorded in November 2024.

The crucial point is that the market currently anticipates a decline in employment growth for the last month of 2024. However, if the data significantly exceeds the expected 160,000 jobs, this could be interpreted as a strong signal of economic stability to start the year. Such scenario could align with the Fed's perspective of keeping rates stable, which would counter bullish prospects for the Dow Jones and potentially reinforce long-term bearish pressure.

It is important to note that employment growth throughout 2024 have been mostly declining. In February, a solid figure of 353,000 new jobs was reported, but the numbers began to decline consecutively throughout the year, culminating in a notably low figure released in November, with just 12,000 new jobs created.

NFP Trend 2024

Source: ForexFactory

This indicates that the U.S. has experienced a significant reduction and lack of consistency in job creation, which in the long term implies weaker total consumption within the country, leading to lower sales and profits for American companies. These events have raised concerns about an internal economic slowdown in the U.S., contributing to growing indecision and increasing bearish pressure on the Dow Jones at the start of the year.

Technical Forecast for the Dow Jones (DJIA)

The DJIA has attempted to establish a new bearish trend that began in early December 2024, from the peak level of 45,000 points. Currently, the price has stabilized around key support zones (42,300), but uncertainty ahead of the employment data release has maintained bearish pressure in recent sessions.

Source: StoneX, TradingView

Potential Trendline: Bearish momentum has been evident in much of the price action over the past few weeks. A tentative downtrend can now be drawn, supported by the lower highs presented by the Dow Jones. Although the price has crossed below the 50-period SMA, the 100-period SMA remains the primary obstacle for bearish movements. If the support level at 42,300 points is breached, the new trendline could extend under increased selling pressure.
TRIX: The TRIX indicator line has consistently oscillated below the 0 level, suggesting that the average movement of exponential moving averages has been declining in the short term. This highlights bearish dominance in the Dow Jones price. As the TRIX line moves further below the neutral 0 level, bearish moves could accelerate, amplifying selling pressure.
Key Levels:

43k points: The nearest resistance level, corresponding to correction levels from December and November. Oscillations above this level would negate a potential bearish trend and open the door to possible lateral movements in the Dow Jones.
42k points: A nearby support level that aligns with the natural barrier of the 100-period SMA. Movements below this level could consolidate bearish momentum and establish a potential short-term downtrend.

40k points: A crucial support level for future Dow Jones movements. Oscillations near or below this level could pose a significant threat to the long-term uptrend that the index maintained through much of 2024, handing control to bearish forces.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.