Dow Jones Industrial Average (.DJI) Finishes Up 83, Nasdaq Climbs 95

Dow Jones Industrial Average (.DJI) Finishes Up 83, Nasdaq Climbs 95

Dow Jones Industrial Average (.DJI) Finishes Up 83, Nasdaq Climbs 95

Technology companies led stocks to broad gains on Wall Street Monday, driving the S&P 500 and Nasdaq composite indexes to more record highs.

Financial, communications services and industrial stocks also notched solid gains. Health care stocks were the only decliners. Bond prices fell, sending yields higher, and the price of gold fell, signs that investors were favoring higher-risk holdings.

The rally, which added to the market’s gains from last week, came as investors looked ahead to the signing of an initial trade deal with China and the potential for future talks.

The world’s largest economies are expected to sign the “Phase 1” trade agreement on Wednesday. It is being viewed as an opening to future negotiations that will deal with more complicated trade issues.

Even a partial deal should remove much of the uncertainty that has weighed on companies and investors, at least until after the election, said Scott Ladner, chief investment officer for Horizon Investments in Charlotte.

“We don’t think the tariff overhang is going to be very relevant over the next nine months,” Ladner said. “Acting tough with China and imposing tariffs two years before an election is a very different story than doing it two months before an election.”

The S&P 500 index rose 22.78 points, or 0.7%, to 3,288.13. The Nasdaq composite, which is heavily weighted with technology stocks, climbed 95.07 points, or 1%, to 9,273.93. The S&P and Nasdaq previously set new highs last Thursday.

The Dow Jones Industrial Average gained 83.28 points, or 0.3%, to 28,907.05.

The Russell 2000 index of smaller company stocks picked up 11.96 points, or 0.7%, to 1,669.61.

Across markets, worries about a recession have faded since last year as central banks cut interest rates and pumped stimulus into the global economy. In addition, the promise of a “Phase 1” trade deal between the U.S. and China has helped lift markets in recent weeks, easing investors’ concerns of further escalation in the costly conflict.

Full details of the pact are due to be released after the agreement is signed at the White House on Wednesday.

Chipmakers were among the gainers in the technology sector Monday. Nivida climbed 3.1% and Micron Technology rose 1.4%. The sector is particularly sensitive to developments in trade relations because many of the companies rely on China for sales and supply chains. Apple also rose, closing 2.1% higher.

Wall Street was also gearing up Monday for a busy opening week of corporate earnings being kicked off by major banks. JPMorgan Chase, Wells Fargo and Citigroup will report fourth-quarter earnings on Tuesday and Bank of America will follow on Wednesday.

Analysts predict corporate profits slid by 2% during the fourth quarter, which would mark the first time that earnings for the S&P 500 have fallen four quarters in a row since the period ending in mid-2016, according to FactSet. Companies typically outperform forecasts and temper expectations for sharp declines by the time the bulk of financial reporting is done.

“The management outlooks for this quarter are probably going to be as much, if not more important, than the actual numbers themselves,” Ladner said.

Delta Air Lines will be the first major airline to report financial results on Tuesday. The nation’s largest health insurer, UnitedHealth Group, will report earnings on Wednesday and railroad operator CSX will report on Thursday.

Wall Street will also have several economic reports to consider this week, including government reports on consumer prices, retails sales and home construction.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 28,025.93.

The projected upper bound is: 29,360.44.

The projected lower bound is: 28,522.48.

The projected closing price is: 28,941.46.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.

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 80.6588. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 9 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 64.19. 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 6 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 117.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 6 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 2 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 83.281 at 28,907.051. Volume was 5% above average (neutral) and Bollinger Bands were 25% narrower than normal.

Open     High      Low     Close     Volume___
28,869.01028,909.91028,819.43028,907.051 263,022,560
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 28,722.41 28,094.36 26,849.07
Volatility: 12 10 14
Volume: 248,226,576 249,932,784 263,025,360

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 7.7% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into .DJI (mildly bullish). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 21 periods.

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