Monday, June 17, 2019

DOWJONES - 17 June 2019


Fundamental Highlights

The Dow Jones Index rose modestly last week as prospects of a Fed rate cut kept US markets afloat in the face of the US-China trade impasse. The Index ended slightly lower on Friday as US economic data revealed a rise of 0.4% in industrial production and an increase of 0.5% in May in retail sales. While the positive retail sales data suggests a pick-up in consumer spending, a vital contributor to economic activity, it may undermine the Fed’s disposition towards easier monetary policy amidst signs of a weakening domestic economy. The key event of the week resides at the FOMC meeting where markets’ heightened expectations for a rate cut may be disappointed as mixed US economic data doesn’t sufficiently support the Fed’s intent to reduce the benchmark rate. Today, the US publishes the NY manufacturing index report which may have a subdued market reaction as trade headlines hold a stronger influence and remain at the forefront of market's' concerns. We can expect investors to remain on the sidelines as they await further trade developments and the FOMC meeting to determine direction on the Dow which traded within a range-bound last week.

Technical Analysis

The Dow ended 17 points lower at 26089 on Friday while it remains within a range bound of 25950/26260 as markets await the FOMC meeting this week for direction. The Dow managed to consolidate gains above the 26000 level and is pointing to a positive opening today as it attempts to re-test the resistance zone of 26240/26260. Look for a sustained move above 26080 to indicate buying pressure and a decline below this level to indicate selling pressure and target the lower support at 25950. Meanwhile, the Dow is expected to remain within the bounds of the Bollinger bands suggesting indecision and impending volatility.

Support: 26080/ 25950
Resistance: 26260/26380

Chart (H4)