The Dow Jones Index resumed its downward trend today, March 5, as the war in the Middle East continued and odds of a ceasefire happening between Iran and the United States fell on Polymarket.
Summary
- The Dow Jones Index retreated by over 500 points on Thursday.
- Traders on Polymarket believe that there will be no ceasefire any time soon.
- The index has formed a rising wedge pattern, pointing to more downside.
The Dow Jones Index, which tracks the performance of 30 large American companies, retreated by over 500 points. Similarly, the other top blue-chip indices like the S&P 500 and Nasdaq 100 fell by over 0.10%.
This retreat happened as Iran denied reports that it had reached out to the United States for talks on how to end the ongoing war. As a result, odds of a ceasefire happening this month tumbled to 27%. Similarly, the odds of a ceasefire happening in April fell by 23% to 48%.
As a result, the Fear and Greed Index continued falling, moving to the fear zone of 39. At the same time, the price of crude oil continued rising, with Brent moving to $85 and the West Texas Intermediate moving to $78.
A prolonged war in the Middle East is risky for the stock market because of the fresh supply chain shocks that will happen. It also risks stoking inflation, which will make it hard for the Federal Reserve and other central banks to cut interest rates soon.
Most companies in the Dow Jones Index were in the red, with Walmart falling by 3.90%. Merck shares fell by 3.2%, while Sherwin-Williams, Procter & Gamble, Johnson & Johnson,and Amen falling by over 2.50%.
Only four companies in the index rose today. Salesforce stock jumped by 4.46%, while IBM, Chevron, and Microsoft rose by 1.90%, 1.01%, and 0.60%. Chevron is benefiting from the ongoing crude oil and natural gas prices surge.
Dow Jones Index is at risk of falling further
The blue-chip Dow Jones Index has retreated substantially in the past few weeks. This retreat started after it moved to the psychological level of $50,000. It is common for an asset to retreat after testing such a significant level.
The stock retreated after the two lines of the rising wedge pattern neared their confluence. A rising wedge is a highly accurate reversal chart pattern.
It is now nearing the 23.6% Fibonacci Retracement level. Also, it has already moved below the 50-period moving average. Whenever an asset drops below that average, it is usually a sign that bears have prevailed.
The Average Directional Index has rebounded to 15, a sign that the sell-off is gaining momentum. Therefore, the most likely Dow Jones Index forecast is bearish, with the next key target being the 23.6% retracement level at $47,250.
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