Dow Jones Industrial Average (.DJI) caution ahead of major bank earnings

Dow Jones Industrial Average (.DJI) caution ahead of major bank earnings

Dow Jones Industrial Average (.DJI) caution ahead of major bank earnings

U.S. stock-index futures dropped on caution ahead of major bank earnings and no signs the longest partial government shutdown in modern history is ending.

Futures contracts on the S&P 500 Index fell as much as 0.8 percent as of 10:16 a.m. in Singapore after the gauge closed little changed Friday. Contracts on the Nasdaq 100 Index declined as much as 1 percent, and those on the Dow Jones Industrial Average also slid.

“The U.S. shutdown is now starting to move into a troubling length from an economic perspective,” and most analysts expect weak earnings from banks, said Nick Twidale, chief operating officer at Rakuten Securities Australia in Sydney. “This should see pressure on the U.S. indices as we move through the week.”

Despite the shutdown, U.S. stocks completed a third straight week of gains as Federal Reserve Chairman Jerome Powell signaled a more dovish stance and expectations of a positive outcome from the trade talks. The S&P 500 has rallied more than 10 percent since hitting the brink of a bear market on Christmas Eve.

Citigroup Inc. kicks off earnings among major banks on Monday, a litmus test for the sector as analysts became increasingly pessimistic, issuing a slew of cuts to ratings and price targets earlier this month. Cost management, geopolitics and loan growth are key issues as investors assess the impact of Fed rate hikes and President Donald Trump’s trade war with China.

Also front in investors minds is the brewing economic impact of the partial government shutdown that became the longest in the modern era on Saturday and shows no signs of abating. About 800,000 federal workers missed their pay for the first time Friday.

Trump and the Democrats remain at loggerheads over the president’s demand for a border wall funding. While the president hasn’t ruled out declaring a national emergency to end the impasse, his budget team is drawing up contingency plans for a shutdown that extends through the end of February, according to an administration official.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 25,124.90.

The projected lower bound is: 22,849.12.

The projected closing price is: 23,987.01.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.

A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend (which appears to be the case with DJ INDU AVERG) it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend it is called a bullish hammer.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 95.6599. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 52.72. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 11 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 108.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed down -5.971 at 23,995.949. Volume was 25% below average (neutral) and Bollinger Bands were 26% wider than normal.

Open High Low Close Volume___
23,940.01023,996.32023,798.16023,995.949 262,647,504

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 23,505.13 24,427.79 24,961.97
Volatility: 27 30 20
Volume: 334,415,616 379,326,112 332,371,808

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

DJ INDU AVERG is currently 3.9% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .DJI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 0 periods.

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