Monday, November 4, 2019



Fundamental Highlights

US indices ended last week with a rally fueled by a stronger than expected US jobs report. Non-farm payrolls came in at 128k versus an estimate of 89k, while the unemployment rate ticker higher to 3.6% as expected. Contrary to the labor market, US manufacturing activity proves itself to be weak as the ISM manufacturing PMI came in lower than expected and remains in contraction territory. Today the US publishes factory orders data which should impact price action. Apart from the data, traders should continue monitoring US-China trade developments as news suggested that the two nations resolved various issues over a phone call on Friday. Further headlines have yet to confirm the supposed progress on trade-related matters that continues to dominate market sentiment and would ultimately decide whether the bulls can drive the Dow above its record high.

Technical Analysis

The Dow extended its rebound from the 100-period MA as it surged by 300 points to end at 27347 on Friday. The index is now within spitting distance of it all time high at 27390 while the 4H RSI reading has neared the overbought territory. Given the rally, we may see price climb higher before it pullbacks to meet the support provided by the 20-period MA followed by the 100-period MA. A sustained move above the 27350 level would be required to enable gains towards the 27390 high. Look for a trade below the support zone of 27260/27240 to lead price to the support at 27180. Should the 20-period MA currently at 27130 hold, the Dow may rebound from a short-term pullback to test its record high.

Support: 27240/ 27180
Resistance: 27350/ 27390

Chart (H4)