Friday, November 1, 2019



Fundamental Highlights

US indices traded lower on Thursday as news that China expressed doubts on reaching a long-term deal despite President Trump’s recent suggestions of trade progress subdued risk appetite and heightened trade-related concerns. Moreover, the bullish effect of the Fed’s recent rate cut and reservations towards a rate hike faded however should continue to buoy US equities in the meantime. Today, the US publishes ISM non-manufacturing PMI figure and its monthly jobs report for October which includes non-farm payrolls, unemployment rate and wages growth. Expect positively skewed data to provide support on the day. Apart from the data, traders should continue to look at corporate earnings and trade headlines to influence market sentiment and price action.

Technical Analysis

The Dow tumbled by over 300 points on Thursday before paring losses to end 140 points lower at 27046. The index turned lower from the 27230 high of the previous session and found support near the 100-period MA around 26860. The 20-period MA currently at 27060 is acting as dynamic resistance and should determine direction for the day. Failure to show a sustained move above 27060 would leave the Dow ranging lower with a decline below 26970 required to indicate selling pressure. A breach of the support provided by the 100-period MA would lead to the 200-period MA around 26790. On the other hand, trading above the 20-period MA would suggest yesterday’s pullback led to the formation of a higher low from which price would continue to tread higher towards resistance at 27120 and 27180.

Support: 26970/ 26855
Resistance: 27180/ 27230

Chart (H4)