Stock Indices: Storming Historic Highs

Major US stock indices DOW 30 and S&P 500 came close to significant levels, which correspond to historical highs for the first time since the beginning of 2019. In the meantime, DOW 30 and S&P 500 are limited to the highs of 2018, which corresponds to historical maximum values.

DOW 30

The Dow Jones Industrial Average trades under the psychological mark of 27,000, which is a significant resistance to further growth. At the same time, this level of the DOW 30 index is already storming for the third time in two years. The first attempts to take this mark were in January 2018 on the general optimism of the market, but they were limited to the technical correction, which was traced in 2016 and 2017.

The second update of the highs and attempts to take the mark of 27000 DOW 30 index showed already in September 2018. But it was limited by the growing risks of the US trade confrontation. Against this background, even a two-year low was renewed, and many market participants were talking about recession.

The third test of significant resistance can be traced already in April 2019. Such a movement is caused by the natural movement of the market, ignoring the existing risks and showing adaptation to the existing ones.

S & P 500

The dynamics of the S&P 500 is very similar to the dynamics of the DOW 30. In this case, the update of the historical high has already taken place at the level of 2950. The significant psychological maximum of the S & P 500 is the level 3000.

Other World Indices

The DAX, FTSE 100, Euro Stoxx 50 and Nikkei 225 indices are also trading near historic highs, showing a general upward trend and limited to their psychological levels. But it is worth adding that the overall dynamics of all key stock indices remains unidirectional. And if the US stock indices succeed in updating historical highs, we should expect the same from other major world indices.

Impact factors on stock indices

One of the main reasons for the growth of stock indices remains a general optimism on reducing geopolitical risks and signs of acceleration of the world economy and in particular the US economy. Despite the fact that there are no concrete solutions to major world problems, and the general political and military tensions in the world remain very high, the market has adapted to this situation and has become accustomed to growing in the prevailing, not very favorable conditions.

The second significant factor supporting stock indices are positive corporate reports for the first quarter of 2019. They pointed to the global economic recovery and less pessimistic forecasts that were drawn earlier.

And finally, it is worth noting that, technically, the dynamics of the major stock indices remain ascending. And, if stock indices do not update historical highs in May on a quarterly report, we can expect a recurring break. It will increase significantly the chances of this breakthrough in September this year.

Anton Hanzenko