Friday, July 12, 2019

DOWJONES - 12 July 2019


Fundamental Highlights

US indices had a mixed performance on Thursday with the Dow Index rallying to close above the 27000 level for the first time. Bulls extended gains on the solidified prospect of a rate cut following Powell’s two day dovish testimony while the Dow’s outperformance is attributed to a US administrative decision which helped drive a healthcare stock higher. Moreover, market participants are cheering more for a shift in monetary policy than they are lamenting the causes that support such a case; that being slowing global economic growth and a prolonged US-China trade dispute. Separately on economic data, yesterday’s CPI data showed that the rate of inflation unexpectedly picked up to 0.3% MOM and 2.1% annually. Should we see an increase in today’s release of US PPI data, it would be registered as a negative for US equities. Economic data and any trade headlines should influence price action on the Dow today.

Technical Analysis

The Dow gained 227 points on Thursday as it rallied to end above the 27000 level at 27088. Futures are pointing higher this morning and should turn the 27080 level to newly found support should bullish momentum sustain. Moreover, the RSI reading is within the overbought territory suggesting that the index may turn lower. Should 27080 fail as support and the RSI reading exit the overbought territory, we will look for a decline below the 27000 level to indicate a deeper pullback on the Dow. Meanwhile, holding above 27080 would maintain buying pressure with the next target resistance at 27200.

Support: 27080/ 27000
Resistance: 27170/27200

Chart (H4)