Dow Jones Industrial Average (.DJI) Trade Deal’s Done, Earnings Take Focus
After several years of what were often hostile or unproductive negotiations, the U.S. and China finally inked the first part of what the world’s two largest economies are hoping will be a broader trade package. That and some earnings reports from marquee companies paved the way for modest upside for equities Wednesday.
While some of the bloom of the trade deal rose wore off pretty quickly during the trading day, it cannot be argued that China is pledging to buy $200 billion worth of American goods to close the trade gap between the two countries and crack on technology intellectual property theft.
As a voracious consumer of commodities, China will purchase $52.4 billion worth of American energy products, including coal, natural gas and oil, over the next several years as part of the trade accord.
Even with that news, Exxon (NYSE:XOM) and Chevron (NYSE:CVX) were not among the Dow winners today, but losses for the oil giants were minor.
In late trading, about half of the Dow’s 30 stocks were pointed higher.
Onward And Upward For UnitedHealth
As noted above, UnitedHealth, the largest healthcare component in the Dow, was the index’s leader today. UNH reported 2019 earnings of $15.11 per share, beating the recently upped guidance of $15 and easily topping its 2018 profit. UNH reiterated a 2020 forecast of between $16.25 and $16.55 per share.
“Return on equity of 25.7 percent in 2019 reflected the Company’s strong overall operating performance and efficient capital structure. The debt to total capital ratio was 40.2 percent at December 31, 2019, full year dividend payments grew 18.4 percent year-over-year to $3.9 billion, and the Company repurchased 22.4 million shares for $5.5 billion in 2019,” according to a statement issued by UNH.
The company’s Optum health services unit grew revenue by $11.7 billion or 11.5% year-over-year to $113.0 billion.
Goldman Sachs (NYSE:GS) also stepped into the earnings confessional earlier today. Investors reaction to this report was much more subdued than what was seen yesterday with fellow Dow component JPMorgan (NYSE:JPM).
Goldman stock inched up on the day, but its fourth-quarter net income dropped to $1.72 billion, or $4.69 a share, from $2.32 billion, or $6.04 a share a year earlier. Revenue jumped 23% to $9.96 billion, indicating that the problem, by Goldman’s own admission, was rising expenses, something the company said it’s addressing.
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 28,111.33.
The projected upper bound is: 29,742.23.
The projected lower bound is: 28,926.47.
The projected closing price is: 29,334.35.
A white body occurred (because prices closed higher than they opened).
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.
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 84.4690. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 71.79. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 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 175.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 9 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 5 period(s) ago.
Rex Takasugi – TD Profile
DJ INDU AVERG closed up 267.420 at 29,297.641. Volume was 0% above average (neutral) and Bollinger Bands were 18% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 28,862.23 28,202.59 26,893.58
Volatility: 10 9 14
Volume: 266,114,080 249,785,616 262,847,664
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 8.9% 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 24 periods. Our momentum oscillator is currently indicating that .DJI is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.
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