Market News
- Dow Jones Index ended the day down 32.14 points at 25,625.59 but fell as much as 232.46 points during the day. 10-year Treasury yields traded at 2.386 percent and hit a 14-month low, dragging stocks lower during the day.
- Investors are keeping an eye on yields after the 10-year Treasury yields fell below the 3-month rate last week for the first time since 2007, keeping recession fear alive. The U.S. Treasury yield curve has inverted before each recession in the past 50 years and has only offered a false signal just once in that time, according to data from Reuters.
- On the U.S.-China trade front, U.S. Trade Rep Lighthizer and Treasury Secretary Steven Mnuchin are set to resume negotiations with their Chinese counterparts in Beijing on Thursday, in a bid to strike a deal on trade. A successful conclusion could help to divert market focus away from the inverted yield curve.
Market View
- Shares in Asia declined on Thursday morning following an overnight slip on Wall Street. Nikkei 225 is down 370 points and Hang Seng opened 130 points lower. Asian markets are expected to be negative today.
- Fed’s member Daly said Fed funds rate is now at neutral and patience is the way forward. Fed doesn’t want to guess but will look at data. Fed’s guidance on rate path means yield curve inversion may not predict recession as it had in the past.
Dow Jones Index
(CFD Symbol: US30)
Trend :
Recommendation :
Last : 25,566
Target price:
Protective stop:
Outlook
Price was capped by the 20EMA as well as the Fibonacci 50% correction point. If price stays below this resistance, another test of the downside at 25,350 is likely. Only a move above 25,800 would hint of more upside. MACD is bearish but near to the zero line. Stochastic is moving lower without even coming close to the overbought extreme. Stochastic is hinting the trend is bearish.
Trading Idea
Look to sell if price moves towards resistance near 25,700 for a decline to 25,350.
Hang Seng Index
(CFD Symbol: HK50)
Trend : Bearish
Recommendation : Short
Last : 28,734
Target price: 28,150
Protective stop: 28,950
Outlook
Price is capped by the 20EMA line. For 2 days, price had been unable to break above the 20EMA. MACD is bearish and the fast line is looking like it will turn down near the zero line. Stochastic is near to the overbought extreme and could also be turning down. These signs do not bode well for this index. The index is likely to test the support at 28,474 and a break will lead price to 28,064.
Trading Idea
Sell near current 20EMA line for a test of 28,065.
Nasdaq 100 Index
(CFD Symbol: USTec)
Trend : Bearish
Recommendation : short
Last : 7283
Target price: 7195
Protective stop: 7385
Outlook
Price was capped by the Fibonacci 62% retracement and has since moved lower to near the low of 7258. A break of this support is likely to bring price lower to 7195. MACD is bearish. Stochastic is weak but is near to the oversold extreme. We see this index going lower but the downside could be limited.
Trading Idea
Look to sell at current market price for a test of 7195 target.
Nikkei 225 Index
(CFD Symbol: JP225)
Trend :
Recommendation :
Last : 21,045
Target price:
Protective stop :
Outlook
This index is near to the support base. There are two supports at 28,893 and at 28,843. If price can hold this support area, there is a chance of this index going higher again. Stochastic is near to the oversold extreme and could be turning up. MACD could be forming a bullish divergence.
Trading Idea
Wait for better trade signals.
