US Indices ended marginally lower on Wednesday despite positive earnings reports. China’s upbeat data aided a lift in early trading while low-volume may curb advances past the recent highs. Given that equities are approaching record highs, the narrative of an imminent Sino-US trade deal and a dovish Fed merely upholds the bullish trend while consistently strong earnings reports alongside a positive business outlook is required to drive prices higher as they reflect the health of the US economy. Today is a busy day on the economic calendar as the US publishes core retail sales, Phil manufacturing index and jobless claims report. Earnings reports remain indicative of price action while the data should influence sentiment for the day.
The Dow Index fluctuated between gains and losses before ending virtually flat at 26449 on Wednesday. The index has since traded lower and reached support around 26315 from which a trade below would target the support at 26260. However, if the support at 26315 holds, price should bounce off the lower band to test the 20-period MA which will be indicative of near-term direction. Moreover, the hourly chart shows the shorter 20-period MA crossed below the longer 50-period MA suggesting a short-term change in direction which could drive the index below the 26300 level. So long as price holds below the 26450 level, selling pressure remains intact.
Support: 26300/ 26260
Resistance: 26400/ 26450