Dow Jones Industrial Average (.DJI) traders worry about trade tensions between the United States and China weighed on the market

Dow Jones Industrial Average (.DJI) traders worry about trade tensions between the United States and China weighed on the market

Dow Jones Industrial Average (.DJI) traders worry about trade tensions between the United States and China weighed on the market

The Dow and broader stock market fell Tuesday as worries about trade tensions between the United States and China weighed on the market.

American and Chinese officials are returning to the negotiating table this week in Washington, DC, but investors are pessimistic about the chances of reaching a deal.

Overshadowing the get-together is a blacklist of 28 Chinese organizations. The United States has effectively barred those companies from importing US technology because of their alleged roles in facilitating human right abuses in China’s Xinjiang region.

Investors are awaiting potential retaliation from Beijing.

The United States is also restricting visas for Chinese officials over the allegations, Secretary of State Mike Pompeo tweeted, an announcement that pushed markets lower Tuesday afternoon.

The Dow (INDU) closed 314 points, or 1.2%, lower. The S&P 500 (SPX) also bounced back, and was last down 1.6%.

The tech-heavy Nasdaq Composite (COMP) traded 1.7% lower.
Stocks closed lower on Monday, following a rather uneventful trading day.

It was the market’s first down day in three sessions.

The 10-year Treasury yield was lower for most of Tuesday, last at 1.5340%.

The demand for safe-haven bonds was broadly strong thanks to the trade uncertainty. Yields and prices move opposite one another.

Trade is keeping investors on their toes. Some 24 hours after President Donald Trump signed a trade deal with Japan, and a week after the United States slapped import tariffs on the European Union over subsidies for Airbus, there is little indication how it will all play out.

This uncertainty is weighing on business sentiment.

The NFIB small business survey showed optimism fell for a second straight month in September, though it remains relatively high on the whole. The uncertainty index in the survey also rose.

Comments from Federal Reserve Chairman Jerome Powell at the National Association for Business Economics conference briefly helped stocks pare gains Tuesday.

Powell reiterated that the central bank would keep acting “as appropriate,” without commenting on a possible interest rates cut later this month.

Expectations for a rate cut at the 30 October meeting are at 82%, according to the CME FedWatch Tool.

The central bank will also announce measures to expand reserves but stressed it wasn’t as much quantitative easing as balance sheet management.

In economic data, the producer price index for September slipped to 1.4% year-over-year, compared with 1.8% expected. Stripping out the volatile food and energy component, the core PPI fell to 2% year-over-year, versus 2.3% expected. That inflation rate is roughly in the target range for the Federal Reserve.

“The decline in core producer prices in September was driven mainly by the volatile trade, trasnport and warehousing services components, but the big picture is that domestically-generated inflationary pressures remain fairly subdued,” wrote Andrew Hunter, senior US economitst at Capital Economics.

All this comes ahead of the consumer price inflation read on Thursday, which is expected to come in at 1.8%, according to economists polled by Refinitiv.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 26,983.81.

The projected lower bound is: 25,301.97.

The projected closing price is: 26,142.89.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 4 falling windows in the last 50 candles–this makes the current falling window even more bearish.

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 56.4373. This is not an overbought or oversold reading. The last signal was a buy 3 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 40.73. 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 44 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 -105.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 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 sell 11 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed down -313.980 at 26,164.039. Volume was 4% below average (neutral) and Bollinger Bands were 10% narrower than normal.

Open     High      Low     Close     Volume___
26,276.59026,421.81126,139.80126,164.039 251,424,512
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 26,566.74 26,468.32 25,899.87
Volatility: 18 20 18
Volume: 242,163,264 270,422,336 289,013,888

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 down today (bearish) 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 1.0% 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 2 periods.

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