Tuesday, November 5, 2019



Fundamental Highlights

US indices surged to fresh highs on Monday as Friday’s healthy jobs data supported risk appetite while trade optimism on the day served as a catalyst. Bullish sentiment was tied to news that China and the US intend on signing phase one agreements and that the US would grant its companies licenses to do business with Huawei. While it offers a semblance of better relations, the developments have yet to materialize otherwise the higher moves in US equities would be unsustainable. Meanwhile, a decline in US factory orders had a muted impact on the day. However, today’s economic data may factor into price direction as the US publishes September’s trade data, Jolt job openings, and ISM non-manufacturing PMI figure for October. Apart from the data, markets should continue to monitor trade headlines as it remains the strongest driving force and it is a question of whether trade hype alongside corporate earnings can continue to drive the Dow higher.

Technical Analysis

The Dow extended Friday’s rally and pressed above its record-high of 27390 to close 114 points higher at 27462 on Monday. The price managed to hold above the 7350 level which enabled an advancement towards a newly-found resistance at 27472. Today, look for a break above 27472 to signal a bullish continuation while holding below this resistance level and above the 27370 level would signal a stall in momentum. A sustained move below 27370 coupled with an RSI reading exit from the overbought territory would indicate that buying pressure is weakening and lead the Dow towards the support at 27260. Below 27260, the index would pull back to towards the support zone bounded by the 20 and 50-period MA.

Support: 27370/ 27260
Resistance: 27472/

Chart (H4)