It was a gloomy day on Wall Street as US indices post sharp losses on Thursday amidst persisting fears over the US-China trade impasse. The latest trade developments dampened investors’ confidence and the prospect of a near-term resolution as Chinese official reportedly claimed that the Sino-US trade war will stretch far longer than markets anticipated. Separately on economic data, US Manufacturing PMI fell to 50.6 highlighting weak economic activity in the US. The data coupled with trade concerns prompted risk averse flows which translated into lower treasury yields as weaker sentiment ramped up demand for safer assets. Today, traders should look to US core durable goods order to impact price action during the day whilst monitoring US-China headlines to influence the prevailing trade pessimism.
The Dow suffered a loss of 1.11% on Thursday and ended at 25490. The Dow’s recovery off its low at 25200 didn’t build enough momentum to sustain upside price action and overcome resistance at 12950 limiting price’s reach from the 26000 level , thereby highlighting the Index’s vulnerability to further downside price action. The Dow broke its sequence of higher lows as it fell below Monday’s low at 25560 and once again dipped below the 200-day Ma at 25432. Look for the 20-period MA around 25680 to determine near-term direction as a sustained move below this level would maintain selling pressure while a break below 25330 would lead to a re-test of the support at 25200.
Support: 25430/ 25330
Resistance: 25680/ 25880