US indices closed modestly lower on Monday as optimism over US-China trade progress wears off following news that China is seeking further talks with the US before signing on their latest agreement. In terms of data, the US publishes its NY manufacturing index figure for October today which should impact direction. However trade headlines will bear the strongest influence on Wall Street as market participants seek to buoy US equities amid semblance of trade progress. Moreover, a slew of US corporate banks are scheduled to release 3rd quarter earnings report which would provide direction during the day. Given the recent rally on the Dow, it would take positive geopolitical headlines and economic data to enable further gains.
The Dow declined by 29 points to close at 26787. Following its recent sharp rally, the Dow is seen easing back as it briefly dipped below the 26720 level to find support near 26650. A failure to break above its most recent high at 26980 near the psychological resistance at 27000 would ensure that the Dow is due for a short-term pullback. Look for a sustained move above 26850 to indicate buying pressure while taking out the high at 26980 would enable further gains. On the other hand, a sustained move below 26720 near the 200-period MA would indicate selling pressure while taking out the support at 26650 would signal further losses towards 26600 and 26520.
Support: 26720/ 26650
Resistance: 27000/ 27110