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Dow Jones Industrial Average (.DJI) US central bank is expected to leave borrowing costs unchanged

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Dow Jones Industrial Average (.DJI) US central bank is expected to leave borrowing costs unchanged

Wall Street climbed on Monday, with Facebook, Apple and Amazon leading the way, as investors awaited a key Federal Reserve meeting that is expected to lay the groundwork for an interest rate cut later this year.

The US central bank is expected to leave borrowing costs unchanged at its two-day policy meeting starting Tuesday, but its statement will provide insight into the impact of the US-China trade war, President Donald Trump’s calls for a rate cut and weaker economic data.

With investors expecting a rate cut as early as July, the S&P 500 index has risen 5 per cent this month after tumbling in May due to fears about the US-China trade war.

Buttressing expectations of a rate cut this year, the New York Federal Reserve said its Empire State gauge of business growth in New York state posted a record fall this month to its weakest level in more than two and a half years, suggesting an abrupt contraction in regional activity.

“The Empire manufacturing numbers that came out were dreadful,” said Jack Ablin, Chief Investment Officer at Cresset Wealth Advisors in Chicago. “We’re back to that the idea that bad news is good news, with the Fed meeting around the corner, and that the Fed will respond with lower rates.”

The Fed’s rate-setting committee is due to release its statement at 2 PM EDT (1800 GMT) on Wednesday, with Fed Chair Jerome Powell holding a press conference shortly after.

The S&P banks index, which tend to benefit from a rising interest rate environment, dipped 0.36 per cent, while the broader S&P 500 financial sector edged down 0.40 per cent.

Volatile investor favorites Facebook, Apple, Amazon, Microsoft and Netflix contributed more than any other stocks to the S&P 500’s gain.

At 2:33 PM EDT, the Dow Jones Industrial Average was up 0.17 per cent at 26,134.34 points and the S&P 500 had gained 0.23 per cent to 2,893.51. The Nasdaq Composite added 0.79 per cent to 7,858.39.

Keeping the gains in check for the blue-chip Dow index was a 3.7 per cent decline in Dow Inc after brokerage BMO Capital Markets downgraded the chemicals maker’s stock to “market perform” on rising macro uncertainty.

Array Biopharma Inc surged 56.6 per cent after Pfizer Inc agreed to buy the drugmaker for $10.64 billion to beef up its cancer portfolio. Pfizer was mostly unchanged.

Investors are also looking forward to the G20 summit at the end of the month for an update on the progress in talks to resolve the prolonged trade war between the United States and China.

The S&P 500 posted 35 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 58 new highs and 77 new lows.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 26,680.92.

The projected lower bound is: 25,533.26.

The projected closing price is: 26,107.09.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.

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 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 58.7628. This is not an overbought or oversold reading. The last signal was a sell 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 58.51. 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 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 73. This is not a topping or bottoming area. The last signal was a sell 3 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 7 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 22.920 at 26,112.529. Volume was 30% below average (neutral) and Bollinger Bands were 35% wider than normal.

Open High Low Close Volume___
26,108.52926,165.77926,049.80126,112.529 199,495,936

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 25,900.13 25,991.98 25,434.41
Volatility: 12 14 20
Volume: 240,279,744 277,963,392 319,495,712

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 is currently 2.7% 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 3 periods.

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