US Indices traded lower on Wednesday driven down by energy shares as oil prices plummeted following a buildup in US oil supplies. Meanwhile, there is equal optimism over the prospect of a near-term Fed rate cut as there is pessimism over the persisting trade tensions between the US and China. A muted inflation report continues to boost hopes of easier monetary policy from the Fed while weighing on US treasury yields as both YOY core and headline CPI data fell short of expectations. However, US-China trade tensions outweigh expectations of a rate-cut and should prove a stronger catalyst as it tampers with the global growth outlook. The Dow will look to economic data to provide policy cues and trade headlines to determine the overriding sentiment and dictate market direction as investors wait on the sidelines.
The Dow Jones traded 0.17% lower to end at 26004 on Wednesday. The index’s failure to push past the resistance zone of 26240/26260 marks cautious sentiment as traders await positive updates on the global trade front to print new highs. The price is currently trading below the 20-period MA around 26080 which should determine near-term direction on the Dow as it acts as dynamic resistance. Meanwhile the RSI reading confirms the short-term neutral bias as it resides around the 50 midline. Look for a sustained move below 26080 to maintain selling pressure with a decline below the 26000 level to target the 25950 level separating the DOW from negative territory. Above 26080, price faces resistance at 26150 acting as a barrier for a retest of the recent highs around 26240.
Support: 25950/ 25830