Friday, October 25, 2019



Fundamental Highlights

Wall Street saw a mixed trading session on Thursday with the Dow being the only major index to end lower. Shares of the Dow member 3M posted better than expected earnings however disappointed with its forward guidance and dragged the index lower to erase earlier gains prompted by strong earnings from the tech sector. Meanwhile, US economic data disappointed as figures of new home sales, market composite PMI and durable goods orders came in lower than expected. It is worth noting that the data would support the case for lowering interest rates as the next FOMC meeting approaches next week. Today, the US publishes Michigan consumer sentiment figures which should have a muted impact on the majors as corporate earnings garner attention and determine price action. With the bar set so low for earnings, beating earnings estimates has favored the bulls however doesn’t provide an encouraging outlook for the domestic economy. Traders should continue monitoring trade headlines as sentiment towards the US-China trade situation bears the strongest influence.

Technical Analysis

The Dow closed modestly lower as it lost 28 points to end at 26805. The price attempted however failed to breach the 50-period MA and turned lower to meet the confluence of support between the 26660 level and October’s ascending trend line. The Dow is seen trading sideways within the bounds of the Bollinger bands suggesting that an eventual breakout will lead direction. Holding above the support at 26660 level would maintain the Dow’s uptrend, while overcoming the 50-period MA followed by the resistance at 26885 would clear the bulls’ path towards resistance at 27000. Should 26660 fail as support, we should see price trend lower to meet the lower levels at 26590 and 26550.

Support: 26660/ 26550
Resistance: 26885/ 27000

Chart (H4)