Dow Jones Industrial (DIA)

Feb 4, 2021Trade Ideas

Apparently, the Dow Jones doesn’t know the meaning of down.

Since November 2020, the index exploded from 26,143 to a recent high of 30,978 after catching support at its 50-day moving average. If it can now break above resistance at 31,272, it could see higher highs. Not only are jobless claims improving, but we could soon see another round of stimulus. There’s also a proposal on the table that could provide $4,200 per year for children up to the age of 6, as well as $3,000 per child age 6 to 17, according to The Washington Post.

Admittedly, markets are overdue for a healthy pullback.

However, with a good deal of excitement over stimulus and the economy, momentum isn’t slowing. To trade further potential upside in the DJIA, you can buy to open the DIA March 19, 2021 310 calls at market. Investors can use the DIA March 19, 2021 305 put to hedge.

Near-term best case scenario, the Dow could potentially test 32,000.

Worst case scenario, the Dow could retest its 50-day at 30,410.


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