Monday, May 6, 2019

DOWJONES - 06 May 2019


Fundamental Highlights

Following the two-day sell-off prompted by the Fed’s unexpected neutral stance, US Indices surged higher on Friday at the back of a strong US Job reports. The economy added 263K jobs in April, the unemployment rate fell to a record low of 3.6% while wages growth remained steady thereby indicating subdued inflation. However, Friday’s gains on US equities were seen reversing this morning due to news reporting President Trump threatened to raise tariff rates on Chinese imports as a tactic to prompt a resolution to the protracted trade dispute. The move undermines the reported progress the two nations have made and may stall scheduled trade negotiations this Wednesday. Traders should continue to monitor US-China trade headlines upon which markets evaluate the global growth outlook, leaving it a major market driver.

Technical Analysis

The Dow Jones surged 0.75% higher to end at 26504 on Friday due to solid US jobs report that are now well overlooked as US-China headlines set a risk-averse mood and led the Dow futures to fall over 500 points this morning. The decline led to a bearish development on the Dow as price fell below the 26,000 level to find support at 25910. A move below this level may target the support zone around at 25830/25880 coinciding with the rising trend line from March’s lows which may provide ground for the price to bounce back up. A move above 26,080 would lead the Dow Index towards higher resistance at 26170 while a break above 26380 is required to restore the bullish view.

Support: 25910/ 25830
Resistance: 26080/ 26170

Chart (H4)