The SPDR Dow Jones Industrial Average (DIA) ETF continued rising as investors react to the latest Federal Reserve minutes. It jumped to a high of $340, which is about 8% above the lowest level in March. It has risen by more than 19% from the lowest level this year.
Bank earnings season
The DIA ETF has held quite well as investors move on from the recent bank crisis that led to the collapse of Credit Suisse and Silicon Valley Bank. The thinking among investors is that the banking industry is relatively safe. They also believe that banks that collapsed had fundamental challenges in their operations.
For example, Credit Suisse was a troubled bank that made losses worth billions of dollars in the past few years. SVB, on the other hand, only focused on the technology sector. It also made the mistake of concentrating most of its investments in long-term bonds.
The next key catalyst for the DIA ETF is the upcoming bank earning season that kicks off on Friday when leading banks like JP Morgan, Citigroup, and Wells Fargo publish their results. These results will be followed by other large banks like Bank of America, Goldman Sachs, and Morgan Stanley.
The only bank stocks in the Dow Jones are Goldman Sachs and JP Morgan. American Express, which has some banking features. Still, the index and the DIA ETF will react to these earnings because they will provide more information about the state of corporate America.
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Several other DIA ETF constituent companies like UnitedHealth, Caterpillar, Procter & Gamble, and J&J will publish their results this month.
The Dow Jones index is also reacting to the actions of the Federal Reserve. Analysts expect that the Fed will start pivoting soon. It will hike rates by 0.25% in May and then take a strategic pause as it observes the state of the economy.
The actions of the Federal Reserve have an impact on the DIA ETF. For one, it leads to a major decline of the US dollar index (DXY), which is beneficial for most American companies.
DIA ETF stock technical analysis
DIA chart by TradingView
The daily chart shows that the DIA stock price has been in a bullish trend in the past few days. It has managed to move above the 50-day and 100-day exponential moving averages. The Relative Strength Index (RSI) is approaching the overbought level. It is approaching the important resistance level at $344.
This price is important because the fund has formed a rare inverted head and shoulders pattern, which is a bullish sign. Therefore, the fund will likely continue rising as buyers target the key resistance at $369, the highest point in January 2022. This price is about 9% above the current level.
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