Dow Jones Industrial Average (.DJI) China and the United States reached a temporary trade truce
The ceasefire between the United States and China has set off a celebration on Wall Street.
The Dow climbed 288 points, or 1.1%, on Monday. It was up 442 points earlier in the day.
Investors were pleased that China and the United States reached a temporary trade truce. It’s a big relief because the damaging trade war between the world’s two largest economies was set to deepen in January.
The Nasdaq soared 1.5%, while the S&P 500 jumped 1.1%.
Not surprisingly, investors piled back into companies that rely on China for a significant chunk of their sales. That includes tech giants like Apple (AAPL), Nvidia (NVDA) and Qualcomm (QCOM) as well as industrial companies like Boeing (BA), Caterpillar (CAT) and Deere (DE). Tiffany (TIF) jumped 4%, while Wynn Resorts (WYNN) surged nearly 10%.
The relief rally comes after the S&P 500 spiked nearly 5% last week, its best since December 2011. That rebound was triggered by hopes of progress on the trade front and a speech by Federal Reserve chief Jerome Powell that investors interpreted as a signal the central bank will not rush to raise interest rates.
After meeting on Saturday, US President Donald Trump and Chinese President Xi Jinping agreed to hold their fire on tariffs while they try to reach a trade deal. Trump agreed not to raise the 10% tariffs on $200 billion worth of Chinese goods for now. Those tariffs had been scheduled to automatically rise to 25% on January 1. And China said it would be willing to purchase a “very substantial” amount of agriculture, energy and other US products.
Still, some analysts warned that the celebration on Wall Street could be short-lived. China and the United States now only have 90 days to sort out nagging trade issues that have been in contention for years, if not decades. And the statements that emerged from the trade meeting lacked concrete details.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 25,396.53.
The projected upper bound is: 26,729.88.
The projected lower bound is: 24,886.30.
The projected closing price is: 25,808.09.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 5 rising windows in the last 50 candles–this makes the current rising window even more bullish.
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.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 92.2923. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 4 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 58.56. 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 26 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 142.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 5 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 2 period(s) ago.
Rex Takasugi – TD Profile
DJ INDU AVERAGE closed up 287.969 at 25,826.430. Volume was 25% above average (neutral) and Bollinger Bands were 51% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 24,969.29 25,552.22 25,108.56
Volatility: 26 23 18
Volume: 340,184,928 344,615,520 334,387,232
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.
DJ INDU AVERAGE gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
DJ INDU AVERAGE is currently 2.9% above 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 2 periods.