Wednesday, October 23, 2019



Fundamental Highlights

US indices ended lower on Tuesday with the Dow taking direction from the release of its components’ corporate earnings. Better than expected earnings out of P&G and United technologies boosted their respective share prices and lifted the Dow during pre-market hours before McDonald’s disappointing earnings drove the index lower. The Dow’s heaviest member Boeing alongside Caterpillar will publish third quarter earnings result today which will ultimately decide direction on the index. Separately on economic data, US existing home sales disappointed as it declined by 2.2% in September. Today there are no major economic releases to impact price action and sentiment should remain buoyed by positive comments on US-China trade progress. Traders should look to corporate earnings to influence direction on the day.

Technical Analysis

The Dow closed 39 points lower at 26788 on Tuesday. The price initially traded higher however respected the resistance at 26885 and turned lower to find support at 26720. Dow futures are pointing lower this morning as price declined below the 26720 level to meet the support around 26660. A break below this level alongside the ascending trend line from early October would indicate further weakness is in store and lead to the lower levels at 26600 and 26550. The price would have to trade above the 26800 level to indicate buying pressure and suggest a re-test of the resistance level at 26885. Overcoming the resistance at 26885 is required to bring about a more bullish view.

Support: 26660/ 26550
Resistance: 26885/ 27000

Chart (H4)