Dow Jones Industrial Average (.DJI) stocks propelled higher as optimism about a near-term U.S.-China trade resolution

Dow Jones Industrial Average (.DJI) stocks propelled higher as optimism about a near-term U.S.-China trade resolution

Dow Jones Industrial Average (.DJI) stocks propelled higher as optimism about a near-term U.S.-China trade resolution

The Dow Jones Industrial Average joined other major indexes in record territory Monday, with stocks propelled higher as optimism about a near-term U.S.-China trade resolution and a third-quarter earnings season that has been better than feared buoyed sentiment on Wall Street.

What did the major indexes do?

The Dow Jones Industrial Average DJIA, +0.42% advanced 114.75 points, or 0.4%, to finish at 27,462.11, surpassing its previous record close of 27,359.26, set on July 15. The Nasdaq Composite COMP, +0.56% gained 46.80 points, or 0.6%, to close at 8,432.20, while the S&P 500 index SPX, +0.37% rose 11.36 points, or 0.4%, to end at 3,078.27. The Nasdaq and S&P 500 ended at record highs for the second consecutive session.

All three equity benchmarks also hit all-time intraday highs. The last time the three major indexes ended at record highs on the same day was July 15, according to Dow Jones Market Data.

What drove the market?

Wall Street investors saw a fresh round of records amid the latest developments on a so-called phase one agreement between China and the U.S.

On Sunday, U.S. Commerce Secretary Wilbur Ross said that licenses for companies to do business with China’s Huawei Technologies Inc. will be coming “very shortly” and expressed optimism about a pact. However, he said a preliminary deal might not be ready to be signed this month: “We’re in good shape, we’re making good progress, and there is no natural reason why it couldn’t be.” Ross offered Iowa, Hawaii and Alaska as possible sites for a meeting between Presidents Donald Trump and Xi Jinping to sign the deal, during an interview with Bloomberg Television in Bangkok, on the sidelines of the Asean summit.

“The market is enjoying relief from a couple different factors,” Keith Buchanan, senior portfolio manager at Globalt Investments told MarketWatch. “The angst over trade is subsiding and, from an earnings standpoint, corporations are beating a lowered hurdle, while guidance for next year has been better than feared.”

Friday data showed that the U.S. economy created 128,000 new jobs in October, above economists’ estimates of a 75,000 gain, while the unemployment rate ticked higher to 3.6%, in line with expectations.

Meanwhile, market watchers also have characterized quarterly results thus far as better-than-expected, a belief that has underpinned current buoyant sentiment.

Of the 356 companies in the S&P 500 that have reported third-quarter earnings so far, 75.8% have reported earnings per share that exceeded analysts’ estimates, according to data from Refinitiv, above the average 65% beat rate since 1994, putting the index on pace for an overall decline in earnings of 0.8%, up from a predicted 2.2% contraction on Oct. 1.

Stocks considered defensive in nature suffered Monday, as investors sold these in favor of shares of companies in cyclical sectors that tend to do well during periods of strong economic growth. The utilities sector was the worst performing on the 11 in the S&P, as shown by the 1.5% decline in the Utilities Select Sector SPDR Fund XLU, -1.28%. Other defensive sectors, consumer staples and real estate were also down on the day.

CFRA Analyst Sam Stovall downgraded his view of the utilities sector Monday to underweight from marketweight citing the run up in prices of these stocks in recent months. The utilities sector has gained 18.9% during the previous 12 months. Only information technology and real estate have performed better during that stretch.

Meanwhile, investors also were processing developments around Dow component McDonald’s Corp. MCD, -2.72%, after the fast-food restaurant chain said it fired Chief Executive Steve Easterbrook because of his consensual relationship with an employee. Shares of the company fell 2.7%, Piper Jaffray downgraded the fast-food giant to neutral from overweight over Easterbook’s departure.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 26,752.99.

The projected upper bound is: 28,059.92.

The projected lower bound is: 26,937.63.

The projected closing price is: 27,498.77.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 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 7 rising windows in the last 50 candles–this makes the current rising window even more 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 85.4360. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 7 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 64.99. 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 63 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 199.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 2 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 15 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 114.750 at 27,462.109. Volume was 5% above average (neutral) and Bollinger Bands were 16% narrower than normal.

Open     High      Low     Close     Volume___
27,402.06127,517.58027,402.06127,462.109 273,033,184
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 27,059.02 26,764.77 26,225.48
Volatility: 8 13 15
Volume: 265,851,840 249,607,856 278,153,248

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 4.7% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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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