Wednesday, September 18, 2019



Fundamental Highlights

US indices managed to end with modest gains on Tuesday as markets await the FOMC meeting whilst in a risk-off environment due to the uncertainty of the US-China trade situation and the recent attack on Saudi’s oil production facilities. In terms of data, US industrial production recovered from a decline and rose by 0.6% in August. Market participants are cautious optimistic as news report that Chinese officials are set to discuss trade issues with the US later this week and Saudi plans to restore oil production by the end of the month. Today, the US publishes building permits data which is likely to have a muted impact as the focus will be on the FOMC meeting. There are solidified expectations for a 25 bp rate cut which is why economic projections and the FOMC conference will hold stronger influence as markets are seeking clues on future monetary policy. Any hints at an easing bias would enable gains as markets are expecting a monetary policy easing bias.

Technical Analysis

The Dow added 33 points to end at 27110 in a range-bound session on Tuesday. The price initially traded lower and dipped below the horizontal support at 27000 before recovering losses whilst holding below the 20-period MA. Today, look for price to trade below the 27000 level to indicate selling pressure and target the lower support levels at 26900 and 26800. On the other hand, holding above the 27000 level would maintain the Dow’s range bound price action while a sustained move above the 20-period MA would indicate buying pressure. A break above 27320 is required to signal a bullish continuation and target the record high near 27390. Whether the Dow can advance would depend on whether the FOMC conference today suggests an easing bias for future monetary policy.

Support: 27000/ 26800
Resistance: 27160/ 27320

Chart (H4)