Dow Jones Industrial Average (.DJI) scored their third straight rally as investors grew increasingly optimistic about a potential resolution to the the trade war

Dow Jones Industrial Average (.DJI) scored their third straight rally as investors grew increasingly optimistic about a potential resolution to the the trade war

Dow Jones Industrial Average (.DJI) scored their third straight rally as investors grew increasingly optimistic about a potential resolution to the the trade war

The Dow soared Monday and US stocks scored their third straight rally as investors grew increasingly optimistic about a potential resolution to the the trade war and a limit to its economic fallout.Although President Donald Trump has repeatedly fanned the trade war flames, he tweeted Sunday that the United States and China were “talking.” He also tried to tamp down recession fears, tweeting that an end of the trade war would help boost the US economy.Also boosting stocks was China’s response to its slowing economy, which has been rocked by the trade war. The People’s Bank of China on Saturday announced it will making corporate borrowing easier and cheaper, aiming to support growth and employment. It is effectively a rate cut.

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Our economy is the best in the world, by far. Lowest unemployment ever within almost all categories. Poised for big growth after trade deals are completed. Import prices down, China eating Tariffs. Helping targeted Farmers from big Tariff money coming in. Great future for USA!

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Investors, on edge after last week’s tumultuous trading, ate it up. The Dow (INDU) rose about 250 points, or 1%. The S&P 500 (SPX) jumped 1.2% and the Nasdaq (COMP) 1.4%.

The VIX, a measure of market volatility that has been elevated lately, fell 9%.Stock traders focused on the White House’s rosy view of the future — and not economists’ increasingly negative outlook.

The National Association for Business Economics released a report Monday that said 74% of US economists believe a recession is coming in the next two years.

The yield curve inverted between 10-year and 2-year US Treasury bonds last week, spooking the markets and investors about the potential of a US recession in the next few years. An inverted yield curve has preceded every recession in the modern era.

A plurality of economists (38%) believe a recession will begin in 2020. But in some ways, economists are increasingly optimistic. Far fewer economists believe a recession will come this year, and a growing number believe a recession will take place in 2021 rather than next year, according to the survey.

Huge gains and losses have become the new normal on Wall Street. The Dow was up or down triple digits every day last week, including an 800-point loss on Wednesday — the worst day of the year for stocks.Optimism about financial stimulus in the United States, Europe and China has buoyed stocks in the past few sessions.

As the global economy sputters, central banks across the world are promising rate cuts, balance sheet growth and forms of more direct stimulus to help shore up the respective regions’ economies.

Trump continued to complain about the Federal Reserve, calling for a 1 percentage point cut in interest rates. He also suggested the central bank step up restart quantitative easing, the extraordinary policy measures first implemented during the Great Recession aimed at stimulating the economy.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 26,827.01.

The projected lower bound is: 25,450.64.

The projected closing price is: 26,138.83.

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 27 white candles and 23 black candles for a net of 4 white 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 6 rising windows in the last 50 candles–this makes the current rising window even more bullish.

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 48.5081. This is not an overbought or oversold reading. The last signal was a buy 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 46.20. 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 9 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 3. This is not a topping or bottoming area. The last signal was a buy 1 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 20 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 249.779 at 26,135.789. Volume was 10% below average (neutral) and Bollinger Bands were 71% wider than normal.

Open     High      Low     Close     Volume___
26,020.06126,222.32026,020.06126,135.789 252,641,568
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 25,997.01 26,610.49 25,602.93
Volatility: 27 17 20
Volume: 293,043,552 270,201,376 310,730,336

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 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 AVERG is currently 2.1% 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 14 periods.

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