US indices ended mixed on Wednesday as the Fed delivered the widely expected 25 bp rate cut however failed to meet market expectations on the policy outlook for the rest of the year. Fed members were divided on delivering a rate cut and Fed Chairman Powell maintained that the central bank would rely on domestic data to determine their future policy moves while accounting for global headwinds. In terms of data, US building permits and housing starts beat expectations and reflected strength in the housing market which doesn’t support the need for further rate cuts. Today, the US publishes existing home sales data and the Philly Fed manufacturing index which should provide direction during the day. Apart from the data, traders should monitor trade and geopolitical headlines to influence a cautiously optimistic market.
The Dow managed to score a modest gain of 36 points and end at 27147 on Wednesday. The price traded lower and dipped below the 27000 level to meet the support near 26900 before reversing losses following the FED’s rate cut decision. However, as market expectations were not fully met, the Dow’s upside potential was limited as price struggled to trade above the resistance around 26190. The RSI reading is hovering around the 50 midline suggesting that direction remains indefinite. Today, look for a sustained move above the 20-period MA to maintain buying pressure with a trade above 26190 required to enable further gains towards the higher resistance at 27320 followed by the record high near 27390. On the other hand, a break below the 50-period MA near 27058 would indicate selling pressure with a sustained move below 27000 required to drive price towards the support at 26900 followed by 26800.
Support: 27000/ 26900
Resistance: 27190/ 27320