Dow Jones Industrial Average (.DJI) tentative deal to avoid government shutdown
Stocks rose on Tuesday amid news that U.S. lawmakers had secured a tentative deal on border security funding. Improved prospects for a U.S.-China trade deal also boosted equities.
The Dow Jones Industrial Average rose 372.65 points to close at 25,425.76, led by Caterpillar and 3M. The S&P 500 climbed 1.3 percent to 2,744.73 as materials, consumer discretionary and financials outperformed. The S&P 500 also closed above its 200-day moving average — a closely watched level by traders — for the first time since Dec. 3. The Nasdaq Composite advanced 1.46 percent to 7,414.62.
Shares of big banks gained broadly. The SPDR S&P Bank ETF (KBE) jumped 1.2 percent. Goldman Sachs, Citigroup and Morgan Stanley all rose at least 1.6 percent. Bank of America and J.P. Morgan Chase also gained at least 1 percent.
“It appears as though the government shutdown was avoided. That’s good news for the market. That headwind goes away,” said Art Hogan, chief market strategist at National Securities.
On Monday night, congressional negotiators struck a deal in principle that would keep the government open and avoid a shutdown on Friday. The drafted agreement did not contain funds for President Donald Trump’s border wall, however. If the government is going to avoid another shutdown, it will need support from Trump.
The government was shut down for 35 days until Jan. 25, the longest one in history, as Trump and congressional leaders could not come to terms on funding for a wall along the U.S.-Mexico border.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 24,619.10.
The projected upper bound is: 26,450.55.
The projected lower bound is: 24,403.34.
The projected closing price is: 25,426.95.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
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 55.4570. This is not an overbought or oversold reading. The last signal was a sell 2 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 64.69. 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 32 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 99. This is not a topping or bottoming area. The last signal was a sell 3 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 28 period(s) ago.
Rex Takasugi – TD Profile
DJ INDU AVERG closed up 372.650 at 25,425.760. Volume was 23% below average (neutral) and Bollinger Bands were 30% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 25,187.43 24,247.12 25,015.21
Volatility: 15 28 20
Volume: 319,704,000 367,409,280 324,942,176
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 is currently 1.6% above its 200-period moving average and is in an upward trend. Volatility is low 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. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.