Dow Jones Industrial Average (.DJI) Surges On China News
Retail sales unexpectedly dipped 0.2% in February, the Commerce Department reported Monday. Outside of autos, retail sales fell 0.4%. The softer-than-expected data continued to muddy the picture of the consumer, despite the strong job market. But timing shifts in government tax refunds and SNAP payments suggest no cause for worry. That helps explain why the Dow Jones and broader stock market surged anyway, amid optimism that China’s economy is poised for a recovery.
Wall Street expected a 0.3% rise in February retail sales and a 0.4% gain excluding autos.
However, January retail sales were revised to a gain of 0.7% vs. initial reports of a 0.2% uptick. Excluding autos, sales ran up 1.4% vs. the initial figure of 0.9%.
While the January revisions help, the trend still looks weak. From a year ago, February sales rose a tepid 2.2%, both overall and excluding autos.
China Data Boost Dow Jones
Stock market futures pointed to a strong open before the retail sales data, then extended their gains in regular trading. The Dow Jones rose 1.3% and the S&P 500 index 1.2%, both hitting 2019 highs on the stock market today. The Nasdaq composite climbed 1.3%, just below its late March peak.
The 10-year Treasury yield, which perked up to 2.44% ahead of the retail data, kept gaining steam to hit 2.50%.
The wind at the Dow’s back early on came from China. The Caixin/Markit manufacturing survey index bounced back into expansion territory, as did the official government factory survey index.
Analysts cautioned that China survey data in March might only reflect a normal post-Chinese New Year recovery. Still, a stronger than expected U.S. factory survey added to the sense the global economy is coming through the soft patch. The Institute for Supply Management manufacturing index climbed to 55.3, bouncing a bit more than expected after hitting a two-year low of 54.2 in February.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 26,840.63.
The projected lower bound is: 25,751.75.
The projected closing price is: 26,296.19.
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 30 white candles and 20 black candles for a net of 10 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 8 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 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 89.5393. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 8 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 64.65. 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 24 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 210.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 14 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 0 period(s) ago.
Rex Takasugi – TD Profile
DJ INDU AVERG closed up 329.740 at 26,258.420. Volume was 13% below average (neutral) and Bollinger Bands were 61% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 25,780.26 25,500.76 25,196.26
Volatility: 16 14 20
Volume: 309,792,704 313,448,640 320,726,368
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 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 4.2% 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 16 periods.