Monday, October 7, 2019



Fundamental Highlights

Wall Street’s major indices were boosted by a mixed US jobs report on Friday as the data tempered concerns of an economic downturn. The unemployment rate dropped to a record low while the non-farm payroll report came in weaker than expected and wages growth slowed. With economic concerns on the rise, the labor data was interpreted as bullish yet maintained expectations of an easing bias from the FED. Today, there are no major economic releases to provide direction however markets will seek hints on future monetary policy as Fed Chairman Powell is scheduled to speak later in the evening. Traders should look to policy hints as the source of upside potential given the latest slowdown in the US labor market and manufacturing activity. Moreover, market participants should remain cautious ahead of the scheduled US-China trade talks and continue monitoring trade headlines to drive price action.

Technical Analysis

The Dow extended its rebound on Friday by 372 points to end at 26573 as economic data fueled the gains. The price traded above the 20-period MA currently at 26240 which now acts as the support separating the Dow from a more bearish zone. Today, look for a sustained move above 26560 to indicate buying pressure and lead the Dow to test the dynamic resistance provided by the 50-period MA near 26660. Above this level, the Dow would target the higher resistance at 26700 followed by 26800. On the other hand, failure to trade above 26560 would leave price ranging lower with a sustained decline below 26350 required to target the 20-period MA followed by the lower levels at 26120 and 26080. It is worth noting that the index has rallied higher since reaching the low of 25710 where it met the support trend line from August’s low. A break below this trend line would be required to indicate a bearish development and signal further weakness for the Dow.

Support: 26350/ 26240
Resistance: 26560/ 26660

Chart (H4)