Wednesday, October 30, 2019



Fundamental Highlights

The Dow Index traded modestly lower on Tuesday as markets await the Fed’s interest rate decision later today. Given that a rate cut is highly expected, market participants will look to Fed Chairman Powell’s speech and the FOMC statement for indications of looser monetary policy in the future. Much like the previous monetary policy meetings this year, the Fed may not be explicit on further rate cuts however may allude to a willingness to deliver should economic conditions deteriorate. Separately on economic data, the CB consumer confidence came in lower in October while pending home sales ticked higher in September. Today the US publishes ADP non-farm employment change for October and 3rd quarter GDP figure which is expected to show growth slowing. The data will be factored into the Fed’s tone on monetary policy which should trigger volatility and lead direction on Wall Street.

Technical Analysis

The Dow fluctuated between gains and losses before closing 19 points lower at 27071 on Tuesday. The bulls failed to take out the high at 27124 however kept price buoyed above the support at 26970 currently near the 20-period MA. Until the index assembles enough momentum to overcome the 27124 high to enable further gains towards higher levels at 27184 and 27268, we should see price range above the 20-period MA. Look for a sustained move below the 27025 level to indicate selling pressure and re-test the support at 26970. A decline below this level would target the support provided by the 50-period MA near 26885.

Support: 26970/ 26885
Resistance: 27124/ 27220

Chart (H4)