NASDAQ Composite (.IXIC) rising trade tensions led to concerns that a global economic slowdown

NASDAQ Composite (.IXIC) rising trade tensions led to concerns that a global economic slowdown

NASDAQ Composite (.IXIC) rising trade tensions led to concerns that a global economic slowdown

U.S. stock index futures moved lower ahead of trading on Wednesday after rising trade tensions led to concerns that a global economic slowdown was likely. The immediate trigger for such fears was the People’s Bank of China’s decision to set the daily yuan reference rate only marginally below the psychological level of 7 per dollar.

As a result, investors grew averse to risky assets and reached for safe havens like government bonds and gold. Treasury yields plunged to their lowest level in nearly three years while gold soared to a more than six-year high. Also, the central banks of India, Thailand and New Zealand announced rate cuts, further dampening investor sentiment.

Ahead of the opening, pharmacy retail giant CVS Health Corporation CVS released second-quarter earnings. In keeping with its stellar track record over the last four quarter, both earnings and revenues beat estimates. Meanwhile, American International Group AIG and Booking Holdings BKNG ) are expected to release second-quarter earnings figures after the market close. 

Major indexes closed in the green on Tuesday after China’s central bank stepped in to contain the fall of the yuan. On Monday, stocks had taken a sharp drop after China let its currency fall to its lowest level in a decade. The move came as a retaliatory measure after President Trump, on Aug 1, threatened to impose 10% tariffs from Sept 1 on an additional $300 billion of Chinese imports.

The Dow Jones Industrial Average climbed 1.2% to close at 26,029.52 on Aug 6. The broader S&P 500 and tech-laden Nasdaq Composite followed suit, rising 1.3% and 1.4% respectively. The former closed at 2,881.77 while the latter ended the day at 7,833.27. The fear-gauge CBOE Volatility Index (VIX) slumped 18% to close at 20.17. Lastly, advancers outnumbered decliners on the NYSE by a 1.20-to-1 ratio.

Wall Street gained on Aug 6 after the People’s Bank of China stepped in to set the yuan’s official reference point at a level of 6.9683 versus the dollar. The Asian country’s central bank did so to stop the Chinese currency from falling below its 7-to-1 ratio with the greenback.

China allowed the yuan to fall initially likely in a bid to cushion its domestic economy from from the impact of the trade war. In particular, this move came after Trump said he would impose 10% tariffs on the rest of China’s imports to U.S., to be applicable from Sept 1.

Coming to earnings, The Walt Disney Company DIS reported quarterly earnings of $1.35 per share, missing the Zacks Consensus Estimate of $1.76. Increased programming costs at ESPN and heavy investments in ESPN+ and upcoming streaming service Disney+ hurt the company’s profitability in its fiscal third-quarter.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 8,105.03.

The projected lower bound is: 7,630.84.

The projected closing price is: 7,867.94.

Candlesticks

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 26 white candles and 24 black candles for a net of 2 white candles.

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 22.2906. This is not an overbought or oversold reading. The last signal was a buy 0 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 38.86. 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 45 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 -128.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 14 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed up 29.561 at 7,862.826. Volume was 11% above average (neutral) and Bollinger Bands were 27% wider than normal.

Open     High      Low     Close     Volume___
7,747.2747,881.3797,702.4227,862.826 615,184,576
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 8,084.84 7,982.76 7,555.13
Volatility: 25 19 25
Volume: 601,258,816 570,198,080 588,092,288

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

NASDAQ COMPOSITE is currently 4.1% 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 .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 4 periods.

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