DOW surged to new record high overnight as markets took Fed Chair Jerome Powell’s message from the semiannual testimony clearly. That is, Fed is in no way near stimulus exit. The economy is “a long way” from Fed’s employment and inflation targets. He reiterated that Fed “will not tighten monetary policy solely in response to a strong labor market”. Additionally, Fed aims to “achieve inflation moderately above 2% for some time”.
DOW closed up 424.51 pts or 1.35% at 31961.86. Recent up trend has resumed with strong range breakout. For now, near term outlook will remain bullish as long as 31158.76 support holds. Up trend from 18213.65 should target 61.8% projection of 18213.65 to 29199.35 from 26143.77 at 32932.93.
NASDAQ also rose 132.7 pts or 0.99% to close at 13597.96. The rebound came after drawing support from 12985.05 earlier in the week. Note that NASDAQ has indeed led DOW in closing equivalent target at 14184.12 (61.8% projection of 6631.42 to 12074.06 from 10822.57 at 14186.12), earlier in the month. Hence, we might not see NASDAQ following DOW for a new high in the current move, and retake the lead. Let’s see.