- US equity market closed at a two-week low, as investors turned cautious after initially cheering reports that the U.S. and China were close to completing a landmark trade deal. Concerns that stocks are becoming too expensive on the back of a two-month rally from December lows also weighed on sentiment.
- WSI reported a formal agreement could be reached at a summit, likely around March 27, between President Donald Trump and Chinese President Xi Jinping.
- Both Hang Seng and Nikkei were lower today but decline were not significant. US futures were little changed from overnight closing as well. The Dow futures contract is currently down 20 points.
- Trade deal between China and US may have been priced in as talks of a deal were raised as far back as last week. Focus is on a market that had rallied for more than 2 months and is not cheap at the moment.
- A deeper analysis of the 200+ points drop revealed a mixed market condition. While there were more declining issues (58% vs 37%), there were more stocks with new highs than new lows (80% vs 20%).
Dow Jones Index
(CFD Symbol: US30)
Trend : Bearish
Recommendation : Short
Last : 25,798
Target price: 25,500
Protective stop: 26,100
Price trend broke the neckline of a Head and Shoulder chart pattern. This is a bearish reversal pattern with a price target of 25,500. MACD had given a bearish divergence warning while Stochastic is moving lower from overbought extreme. Resistance is at 20EMA line of 25,960.
Price trend is short term bearish. Look for opportunity to get into a short position at 25,900 for a 400 points target ride to 25,500. Stop can be placed at 26,100.
Hang Seng Index
(CFD Symbol: HK50)
Last : 28,809
Price continues to move within the trend channel. It is close to the bottom of the trend channel. Both MACD and Stochastic are showing a divergence, hinting of a price top
With price near to the edge of the trend line, the decision will be decided by price reaction at the trendline. If there is a break below the trendline, go for a short position with target at 28,100. If price can hold the trendline, buy for a test to the top of the trend line. We favour a break of the trendline.
Nasdaq 100 Index
(CFD Symbol: USTec)
Last : 7131
Both MACD and Stochastic are showing divergence warnings of a possible price high. However price is sitting on the edge of a rising trendline dating back to 8th Feb 2019.
Watch for a break of the trend line and follow in the direction of that break at 7084 for a ride down to 6990 level. Stop above 7150.
Nikkei 225 Index
(CFD Symbol: JP225)
Recommendation : Wait for Breakout
Last : 21,719
Protective stop :
Price is near to trend line support. This channel also looks like a possible Rising Wedge chart pattern, which is a reversal pattern. However, MACD histogram is showing a possible turning up, hinting of another price rally. MACD is bullish as well.
Watch the trendline support at 21,650. A break will call for a price move lower to 21,350. If price is unable to move below the trend line, buy with a stop below the trend line with a target of 21,900