Dow Jones Industrial Average (.DJI) – China-Sensitive Names Lead the Way
The new coronavirus from China is still an issue. And it’s one that’s getting worse, not better. However, stocks clung to modest gains Tuesday with the Dow Jones Industrial Average supported by a host of China-sensitive fare.
In other news today, Federal Reserve Chairman Jerome Powell testified before a House committee (he’ll be before the Senate tomorrow), noting that the U.S. economy remains on firm footing. Predictably, Powell did not make overt comments on the central bank’s plans for interest rates this year.
Looking at Dow offenders today, an obvious one is Verizon (NYSE:VZ), which was stung after a New York judge signed off on Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) completing their merger, which will lead to the creation of the country’s number three mobile carrier.
Be Careful Here
As has been widely noted, the energy sector was a mess in January. In fact, it was the only one of the 11 sectors represented in the S&P 500 that traded lower last month.
More recently, Dow components Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) have steadied. Both were among the Dow’s winners today and Chevron is up more than 4% over the past week. Yes, there is value to be had in the energy patch, but valuations are depressed for a reason. Investors may want to wait for a bit “show me” out of Exxon and Chevron before rushing in.
Bottom Line on the Dow Jones Today
I’m usually a fan of the notion that history doesn’t always repeat, but it often rhymes. Hopefully, that proves to be the case with the coronavirus.
“What can we learn from past global disease outbreaks? Economic growth and markets have historically responded with a V-shaped pattern,” said BlackRock in a recent note. “The temporary hit to economic activity results in pent-up demand, which eventually helps fuel the rebound in economic activity. This recovery is typically led by retail and manufacturing sectors, since lost revenues are harder to recoup in the services sector (think of tourism).”
For those looking for another earnings trade on the Dow, Cisco reports after the close tomorrow and to say expectations are tepid at best may be an understatement.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 30,053.77.
The projected lower bound is: 28,858.46.
The projected closing price is: 29,456.12.
A black body occurred (because prices closed lower 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 30 white candles and 20 black candles for a net of 10 white candles.
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 80.7441. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 2 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 59.59. 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 sell 17 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 93. This is not a topping or bottoming area. The last signal was a sell 0 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 5 period(s) ago.
Rex Takasugi – TD Profile
DJ INDU AVERG closed down -128.109 at 29,423.311. Volume was 12% above average (neutral) and Bollinger Bands were 27% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 29,076.45 28,654.25 27,141.09
Volatility: 21 13 15
Volume: 307,044,448 276,844,736 266,414,528
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 AVERG is currently 8.4% 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.
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