US indices ended in bullish territory on Friday as the US and China concluded their two-day negotiations with a partial trade deal. This included the US’s bargain to hold off on tariffs that were due on October 15th as China agreed to expand agricultural purchases. President Trump regarded this progress as phase 1 that has yet to be implemented and followed by a second phase. In terms of data, US Michigan consumer sentiment figures came in better than expected for October. Trade data out of China on Sunday disappointed as its exports and imports declined below their estimated contraction and is a solemn reminder of the damage done by the prolonged US-China trade war. Today there are no major economic releases out of the US which will leave influence to geopolitical headlines while market sentiment should remain cautiously optimistic.
The Dow rose by 1.21% and posted a gain of 319 points to end at 26816 on Friday. The price surged above the resistance at 26650 and managed to trade and hold above the 20-day MA to record an intra-day high at 26980 near the psychological resistance at 27000. Today, look for a sustained move above the previous closing price to maintain buying pressure, while taking out the high at 26980 would enable an advancement above the 27000 level. A decline below the 26720 level near the 20-day MA would signal selling pressure and lead the Dow towards the support zone bounded by the 100-period and 20-period MA at 26650 and 26550 respectively.
Support: 26720/ 26650
Resistance: 27000/ 27110