US indices had a mixed day on Thursday with the Dow posting gains led by better than expected earnings from Walmart. Economic data was also mixed on the day however provided support as US retail sales data showed a rise of 0.7% in July and reflects healthy consumer spending in what market participants are fearing to be a weakening domestic economy. The New York and Philly Fed Manufacturing indices beat expectations while jobless claims increased by 9k. Moreover, US yields continued to decline on Thursday and reflected a risk off environment that may not see an end any time soon as trade tensions show no sign of easing. China disregarded President Trump’s delay of particular tariffs and warned to take retaliatory measures. Today, the US publishes housing data and Michigan consumer sentiment figures both of which should provide direction on the Dow. Meanwhile, expect weak sentiment towards US-China trade relations and the global growth outlook to limit upside potential.
The Dow fluctuated between gains and losses before ending 0.39% higher at 25579 on Thursday. The price exhibited range-bound price action as it dropped to an intra-day low of 25200 and tagged the resistance at 25685 . Today, look for a sustained move above 25685 to drive the Dow towards the higher resistance zone bounded by the 20 and 50-period MA at 25800 and 25930 respectively. From there we may see price turn lower with a move below the 25580 level near 200-day MA required to indicate selling pressure while a break below 25400 targets the lower support at 25200.
Resistance: 25800/ 25930