Tuesday, August 20, 2019



Fundamental Highlights

The Dow Index ended a three day rally as it traded 0.66% lower on Tuesday alongside a decline in bond yields. US equities have been moving in tandem with bond yields recently as fears of an economic downturn in the US persist and has investors buying into the safety of government bonds. Moreover, The US-China trade war remains a strong determinant of markets’ risk mood as the temporary reprieve on Huawei restrictions did little to alleviate tensions between the two nations. Today, the US publishes home sales data however, the focus will be on the Fed’s meeting minutes as market participants seek to reinforce rate cut expectations. While the prospect of monetary policy support may help buoy market sentiment, look to trade and geopolitical headlines to influence price action on the Dow.

Technical Analysis

The Dow lost 173 points to end at 25962 on Tuesday as price failed to extend the rally above the resistance at 26215 and turned lower to meet support at 25870. Today, look to the 20-period MA at 26000 to determine direction on the Dow. A sustained move above this level would indicate buying pressure and lead to a re-test of the resistance at 26215. On the other hand, a sustained move below 26000 would lead the Dow towards the lower support at 25870 followed by 25685.

Support: 25870/25685
Resistance: 26215/ 26350

Chart (H4)