Tuesday, May 14, 2019

DOWJONES - 14 May 2019


Fundamental Highlights

US Indices tumbled on Monday, as the Sino-US trade war escalates. In the wake of President Trump’s decision to hike tariff rates on the world’s second largest economy, China expectedly retaliated with tariffs of 25% on US imports leaving the two nations at greater odds and threatening the prospect of a trade deal. The latest developments sent US treasury yields lower reflecting markets’ risk averse state and putting a damper on demand for US equities. With the trade war’s negative implications for the US and global economy at the forefront of markets’ concerns, traders should monitor trade headlines to influence sentiment and near-term direction.

Technical Analysis

The Dow Index posted a sharp decline of 2.38% and ended at 25324 on Monday. The price declined below the 200-period MA around 25400 and dipped below the 100-day MA at 12330 before reaching a low of 25200. Look for a sustained move below the 25400 level to maintain selling pressure and a trade through key support at 25200 to lead to a bearish development and drive the Dow to potential support at 24900. Alternately, a sustained move above 25400 would signal buying pressure and lead to a test of the 20-period MA around 25617 which is unlikely to be broken.

Support: 25200/ 25080
Resistance: 25400/ 25620

Chart (H4)