Wednesday, July 17, 2019

DOWJONES - 17 July 2019


Fundamental Highlights

The Dow posted its first and mild loss of 0.09% on Tuesday since breaking above the 27000 level. The rally is seen pausing in the wake of the second quarter earnings season which upon assessment would determine whether the bulls can drive the Dow any higher. Yesterday marked a period of indecision as market participants digested mixed results from major US banks’ corporate earnings. Separately on economic data, US retail sales for June rose beyond expectations and reflects healthy consumer spending within the economy. Given that the Fed members have maintained their dovish stance and market participants are expecting a rate cut later this month, economic data will be looked into to assess the extent of the rate cut. Today, the US publishes building permits and housing starts data while notable US corporations from different sectors will release earnings and should impact price action during the day. Moreover, President Trump reiterated his willingness to impose tariffs on China and reignited trade concerns. Market participants should monitor US-China trade headlines to influence sentiment on the day.

Technical Analysis

Since breaking above the 27000 level last week, the Dow Jones has edged higher to score fresh highs until yesterday where it traded 23 points lower to end at 27335. The index is seen consolidating within the range of 27388/27250 indicating a period of indecision. Given that we are in the late stages of a steep uptrend and the daily RSI reading is within the overbought territory, there is a chance we see the Dow retrace should it trade below the 27250 level to target support at 27200. Otherwise, this consolidation is likely to signify a pause until enough momentum is built to break well above the resistance of 27388.

Support: 27250/ 27200
Resistance: 27388

Chart (H4)