Dow Jones Industrial Average (.DJI) China Trade War Pressures Stock Market Rally

Dow Jones Industrial Average (.DJI) China Trade War Pressures Stock Market Rally

Dow Jones Industrial Average (.DJI) China Trade War Pressures Stock Market Rally

Dow Jones futures fell sharply Sunday, along with S&P 500 futures and Nasdaq futures. President Donald Trump said Sunday that the U.S. is “right where we want to be” as the China trade war escalates. But the current stock market rally is under pressure.

Despite Friday’s rebound, the Dow Jones, S&P 500 index and Nasdaq composite suffered sharp weekly losses. Apple (AAPL) was a key loser, with Apple stock falling below its buy point. Meanwhile, Advanced Micro Devices(AMD) held up well. AMD stock, Twitter (TWTR) and FANG stock Facebook (FB) all have new buy points.

The current stock market rally sold off last week after President Trump tweeted on Sunday, May 5, that he planned to hike tariffs on $200 billion worth of Chinese goods from 10% to 25%. Trump carried out his threat Friday morning. Trump also is taking early steps to impose 25% on the $325 billion worth of Chinese goods not currently taxed. Details on that plan are expected Monday.

The major averages rebounded from steep intraday losses to close slightly higher in Friday’s stock market trading. But for the week, the Dow Jones fell 2.1%, below its 50-day line. The S&P 500 index retreated 2.2% and the Nasdaq composite 3%, after both undercut their 50-day averages but managed to close above that support level.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 26,414.62.

The projected lower bound is: 25,471.17.

The projected closing price is: 25,942.90.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with DJ INDU AVERG). It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 34.7063. This is not an overbought or oversold reading. The last signal was a sell 12 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 41.26. 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 52 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 -138.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 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 sell 10 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 114.010 at 25,942.369. Volume was 4% below average (neutral) and Bollinger Bands were 36% narrower than normal.

Open High Low Close Volume___
25,763.72126,019.32025,469.85925,942.369 294,575,360

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

Moving Averages: 10-period 50-period 200-period
Close: 26,253.18 26,079.85 25,422.94
Volatility: 13 12 20
Volume: 298,386,240 297,023,488 318,105,824

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 2.0% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .DJI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .DJI and have had this outlook for the last 2 periods.

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