Wednesday, October 2, 2019



Fundamental Highlights

US indices plummeted on Tuesday after the US revealed disappointing manufacturing activity and triggered a risk-off mode. The ISM manufacturing PMI figure fell into negative territory and reached its lowest level in 10 years at 47.8. While the data supports the case for easier monetary policy, it contradicts the Fed’s claims on a strong domestic economy and suggests that trade tensions and geopolitical risks are not the only concerns. Today the US publishes ADP non-farm employment change which will impact direction during the day. Apart from the data, traders should continue to monitor US-China trade headlines and geopolitical developments to influence sentiment.

Technical Analysis

The Dow suffered a massive sell off on Tuesday as it declined by 343 points to end at 26573. The price fell through the support at 26690 and found support at 26520 while the daily RSI reading has entered the negative territory as it eased below the 50 mid-line. Today, look for a sustained move below 26520 near the 50-day MA to target the lower support at 26420 near the 100-day MA. On the other hand, trading above the 26620 level would lead the Dow towards the 26690 level from which the Dow may move towards the 20-period MA to form a lower high on the downtrend.

Support: 26520/ 26420
Resistance: 26620/ 26690

Chart (H4)