Wednesday, October 16, 2019



Fundamental Highlights

US indices closed sharply higher on Tuesday as positive earnings report from US corporate banks lent US equities major support despite the persisting uncertainty over US-China trade progress. In terms of data, the NY manufacturing index figure came in at 4 versus an estimate of 1. Much like yesterday, market participants will seek support from another batch of US corporate earnings particularly that of Bank of America. Moreover, the US publishes retail sales data which could derail the bulls should figures disappoint as it reflects the health of US consumers. Aside from economic data and earnings reports, traders should continuously monitor US-China trade news as it remains a key driver of price action.

Technical Analysis

The Dow traded 0.89% higher to close at 27024 on Tuesday. The index took out its previous high at 26980 and extended its rally to reach a high of 27084 before easing back to score a gain of 237 points. Today, look for a sustained move above the 27000 level to maintain buying pressure while taking out the recorded high at 27084 would be required to target the higher resistance at 27110. Failure to trade above 27000 would leave the Dow ranging lower, with a move below the 20-period MA around 26850 required to target the lower support at 26730 near the 200-period MA. Given the recent extension of sizable gains, there is a chance we see the Dow turn lower and form a higher low.

Support: 26850/ 26730
Resistance: 27000/ 27110

Chart (H4)