NASDAQ Composite (.IXIC) Investor sentiment lifted
Investor sentiment lifted on Wall Street after upbeat earnings from the large retailers signalled consumer demand is still strong in the United States.
That was despite last week’s recession signals from the bond market which triggered panic selling across global markets.
The Dow Jones index jumped 240 points, or 1 per cent, to 26,203.
The broader S&P 500 and tech-heavy Nasdaq indices lifted by 0.8 and 0.9 per cent respectively.
Target shares surged 20.4 per cent after the big-box retailer raised its annual earnings forecast, while Lowe’s climbed 10.2 per cent after the home-improvement chain reported a stronger-than-expected quarterly profit.
Aggressive rate cut was considered
Markets in New York held onto most of their gains even after the Federal Reserve released the minutes of its July 30-31 meeting.
The US central bank cut rates by 25 basis points, for the first time in a decade, at the end of last month.
The minutes revealed that the Fed had debated cutting interest rates more aggressively at its last meeting due to concerns about a global economic slowdown, trade tensions and sluggish inflation.
However, the central bankers also wanted to avoid giving the impression that they were on a set path to announce more rate cuts.
“A couple of participants indicated that they would have preferred a 50 basis point cut,” according to the Fed minutes.
Since then, the Fed has come under increasing pressure to cut borrowing costs more.
On August 1, US President Donald Trump — unhappy about the Fed’s decision to not cut rates more aggressively — escalated his trade war by announcing tariffs on all Chinese imports that had not already been penalised.
China retaliated by allowing its currency to fall to an 11-year low against the greenback and said it would stop purchasing US agricultural products.
“Thus the Fed minutes do not reflect the change in market sentiment which has resulted in a volatile environment in equity markets and sharp decline in core global yields with 10-year US Treasury yields declining 43 basis points over the period to be currently at 1.59 per cent,” said NAB senior foreign exchange strategist Rodrigo Catril.
Earlier this week, Mr Trump ramped up the pressure by urging the Fed to slash its benchmark rate by 100 basis points.
Futures markets have fully priced a 25-basis-point cut in next month’s Fed meeting.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 8,286.43.
The projected lower bound is: 7,761.90.
The projected closing price is: 8,024.16.
A white body occurred (because prices closed higher 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.
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 83.9314. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 10 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 50.90. 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 55 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 88. This is not a topping or bottoming area. The last signal was a buy 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 0 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed up 71.648 at 8,020.208. Volume was 23% below average (neutral) and Bollinger Bands were 31% wider 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: 7,928.62 8,048.34 7,587.06
Volatility: 31 21 25
Volume: 547,115,136 568,505,280 581,531,904
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.
NASDAQ COMPOSITE is currently 5.7% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 14 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.