Thursday, May 16, 2019

DOWJONES - 16 May 2019


Fundamental Highlights

Wall Street ends higher on Wednesday as trade news offsets downbeat economic data. President Trump reportedly decided to delay auto tariffs on the EU and Japan amidst its escalated trade dispute with China. As positive as the news may be, a mere delay doesn’t improve the global growth outlook. Rather than dreading the prospect of impending trade conflicts, markets are overlooking the broader narrative and using daily news to drive price action. In terms of data, US retail sales which constitutes a large component of consumer spending declined by 0.2% and core retail sales came well below expectations at 0.1%. Moreover, President Trump decided to ban Chinese Telecom Huawei from conducting business with US companies in the name of threatened American technology which could prove a further drag to US equities in the wake of the latest tariffs imposed by the two nations. Alongside trade headlines, traders should look to housing data and Phil Fed manufacturing Index to reflect the US’s economic performance and impact price action during the day.

Technical Analysis

The Dow Index rose 0.45% to end at 25648 on Wednesday. Dow futures are pointing lower this morning and may lead in the direction of the ongoing downtrend following yesterday’s attempts to extend gains past the resistance zone bounded by the 20 and 50-period MA. Given the price reactions to news-driven momentum, volatility within a range-bound could prove to be the state of the Dow for the time being as the RSI reading hovers around the 50-midline to indicate a neutral to bearish outlook in the short-term. A move above the 50-period MA around 25750 may trigger an acceleration towards resistance at 25950. Alternately, a sustained move below 25750 would indicate selling pressure with a move below the 20-period MA required to drift the Dow lower with initial support found at 25400 followed by the recent low around 25200.

Support: 25500/ 25400
Resistance: 25750/ 25950

Chart (H4)