Thursday, October 3, 2019



Fundamental Highlights

Wall Street’s major indices crashed on Wednesday as the Dow plummeted to extend its decline by 1.86% and stacked over the previous session’s heavy loss. This week’s dire manufacturing data triggered the accelerated declines and revealed the negative impacts of the prolonged US-China trade war while yesterday’s weaker than expected ADP non-farm employment data added further pressure as it suggests Friday’s critical NFP data will follow suit and raised fears that the US economy may be on the brink of a downturn. Moreover, the US announced its plan to impose tariffs on the EU serving yet another blow to the global trade front. Today, the US publishes jobless claims, factory orders and non-manufacturing PMI data which will be watched as the recent data has raised economic concerns. With market sentiment as sensitive as ever, expect risk off mode to be maintained and upside price action to be limited.

Technical Analysis

The Dow plunged by 494 points to end at 26078 on Wednesday. The price broke through the 50-day and 100-day moving averages and has yet to break through the 200-day MA near 25900 in order to signal further downside price action. The Index is exhibiting a strong bearish momentum as price hugs the lower Bollinger bands and may further accelerate declines. However, the 4H RSI reading has reached the oversold area which may indicate a short-term rebound that would be confirmed with a sustained move above 26120. Above this level, price would target the resistance at 26215. Failure to trade above 26120 will leave price ranging until a break below the 200-day MA at 25900 signals further weakness towards the lower support levels at 25820 and at 25720 that coincides with the support trend line from June’s low.

Support: 25900/ 25720
Resistance: 26120/ 26215

Chart (H4)