Monday, July 15, 2019

DOWJONES - 15 July 2019


Fundamental Highlights

The Dow Jones traded sharply higher to end for a second day above the 27000 mark on Friday. Fueling the rally are markets’ high expectations for looser monetary policy this month with the question being the extent of the rate cut. While speculative appetite helped drive the Dow higher, markets will eventually turn to other fundamentals, such as global economic data and the status of US-China trade reactions to determine market sentiment. With earnings season kicking off this week, we can expect corporate updates alongside US-China trade headlines to draw attention and potentially reverse risk on flows. In terms of data, China reported better than expected economic data on industrial production and retail sales while its GDP figure slowed to 6.2%. Meanwhile the US has yet to publish its NY Empire State Manufacturing index which may provide the Dow with direction later in the day.

Technical Analysis

The Dow gained over 240 points to end comfortably above the 27000 mark at 27332. The RSI reading remained in the overbought territory while the index recorded a fresh high. Failure to edge and hold above Friday’s close at 27332 would indicate a stall in bullish momentum and possibly lead to consolidation or a pullback. Look for the RSI to exit the overbought territory combined with a sustained move below the 27200 level to drive the Dow towards the support provided by the 27000 level.

Support: 27200/ 27000
Resistance: 27332

Chart (H4)