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Thursday, February 25, 2021

Traders Eye ECB Decision, Stock Market Breadth Improved

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Stocks in Asia took recovered their heavy losses today. The Shanghai index advanced 0.59%. The HSI stock index also moved higher by 0.22% while the Korean Kospi soared 1.21%. The Japanese Nikkei Index rose 0.87%.

The global stock futures are trading between gains and losses after recovering some of their losses from yesterday.

The ECB Day

Traders do not want to bet heavy ahead of today’s main event which is the ECB monetary policy decision. It is widely expected that the ECB is likely to strike a dovish tone, and weakness in inflation may push the ECB to change its inflation forecast.

If the bank lowers its inflation forecast today and doesn’t sound too optimistic about the economic performance of the EU, it is likely that we may see some serious weakness for the euro-dollar pair. It is currently trading at 1.1856. And, if the ECB does what is mentioned earlier, the pair is likely to fall near the 1.1650 mark.

However, if the bank shows more relax attitude, we could see sharp move to the upside for the euro-dollar pair. Nonetheless, one thing is pretty much given that the euro-dollar pair is going to experience higher volatility today.

Dow Index and S&P500 Index: Market Breadth

It was a recovery day for the U.S. stock market. The Dow Jones breadth shows that 67% of the Dow Jones stocks traded above their 200-day moving average yesterday. This is a change of +4% from a day earlier,

The S&P 500 stock breadth also had a bit of fresh air and recovered its strength. 59% of the shares traded above their 200-day moving average yesterday. This represents a change of +2% from a day earlier.

Dow Jones and S&P 500 Futures Today

The Dow Jones futures are trading higher by 43 points. The U.S. unemployment jobless claims data is the important economic reading and traders will be paying close attention to this number. The hope is to see a further recovery in this number. .

The Dow Jones futures have seen remarkable recovery yesterday. The price has bounced back up from its 50-day SMA on a daily time frame. This is a very strong bull signal. The next big hurdle for the Dow’s price is September 7th resistance which is at 11,557. A break of this resistance will certainly confirm the continuation of the upward trend. The Dow Jones’s is also trading above the 100 and 200-day SMA on a daily time which is another sign of bull strength.

The S&P 500 futures, the wider representation of the U.S. equity market, has also bounced off its lows and it is back above the 50-day SMA. This shows that the bulls are in control of the price and as long as the S&P 500 remains above this moving average, the chances are that we may see another record high.

Stock Market Rally

The S&P 500 stock index was in a recovery mode yesterday and it advanced 2.01%. The information technology sector led the index higher, and all of the eleven sectors closed higher.

Qorvo (NASDAQ:QRVO) stock contributed the biggest gain, soaring 7.54%. Tiffany stock was the largest drag; it fell by 6.44%. The S&P 500 stock index’s is up 9.6% during this quarter.

The Dow index soared 439 points yesterday, and the Dow stocks moved the index lower by 1.60%. 25 stocks of the Dow Jones Index increased in value, and 5 shares of the Dow index moved lower. Salesforce stock advanced higher by 3.8% and was the biggest mover for the Dow, while Disney stock dropped 0.63%, the biggest drag for Dow Jones industrial average index.

The NASDAQ composite, a tech-savvy index, rose 2.96% yesterday.

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