Thursday, July 11, 2019

DOWJONES - 11 July 2019


Fundamental Highlights

US Indices traded higher on Wednesday as Fed Chairman Powell reasserted his dovish stance and confirmed expectations of a rate cut this month. He remarked that crosscurrents have re-emerged and underlined the uncertainties lingering over the US economy amidst the risks posed by the prolonged US-China trade dispute and slower global economic growth. With monetary policy being the current dominant theme in markets, bad news on the domestic and global economy has been interpreted as good news because of its implications on the widely favored rate cut. However, the prospect of a rate cut can only take equities high enough and should prove to be short lived as earnings season is around the corner and fears of lower corporate earnings and trade uncertainty will preoccupy market participants. Today, the US publishes CPI data alongside weekly jobless claims report while Powell is to deliver his second testimony which is unlikely to contain a different outlook yesterday’s.

Technical Analysis

The Dow stepped back into its territory of record highs on Wednesday before ending 0.29% higher at 26860. The index once again found support at the 100-period MA before buyers erased losses and drove price as high as 26975. If the bulls fail to push the price beyond that point, then the Dow would have formed a lower high since reaching its peak at 26995 last week. Look for a sustained move above 26830 to indicate buying pressure with a trade above 26975 required to suggest attempts at surpassing the 27000 resistance level. Alternately, a sustained move below 26830 indicates selling pressure with a trade below the support of 26720 coinciding with the 100 period MA required to drive the Dow to test the support at 26660 separating the Dow from a downtrend.

Support: 26830/ 26720
Resistance: 26975/27030

Chart (H4)