Friday, October 11, 2019



Fundamental Highlights

US indices ended higher on Thursday after President Trump announced he would meet with Chinese officials for a second day. The news was interpreted as positive as earlier in the day it was reported that China would cease negotiations on Thursday. Markets are reacting to headlines that raise hopes for progress and offset concerning developments such as the US’s additional blacklisting of Chinese tech companies rather than fundamental changes in the trade situation. A limited trade agreement would suffice in boosting US equities given that the two nations struggle to find common ground. For now, the bulls are in a fragile position as there hasn’t been any substantial trade progress. In terms of data, CPI figures revealed inflation remains on the softer side. Today, the US publishes Michigan consumer sentiment figures which is likely to have a muted impact on price action as US-China trade headlines remain the key driver.

Technical Analysis

The Dow rose by 150 points to end at 26496 on Thursday. The price found support at 26080 before bouncing back up and breaching the 50-period MA to reach the resistance at 26600. Today, Dow futures are pointing higher and attempting to trade above the resistance at 26650 after which it would meet the 20-day MA near 26700 with resistance. Failure to overcome the 26650 level would lead the Dow to turn lower with a sustained move below 26500 required to indicate selling pressure while a decline below the support at 26390 would lead to the lower levels at 26260 and 26200.

Support: 26390/ 26200
Resistance: 26650/ 26700

Chart (H4)