DJ 30 SLUMPS BELOW MA20 DAY AFTER HISTORIC RALLY
DJ 30 futures are currently trading at 22426- lower by 1.92% as compared to the previous close. However, the contract closed in positive territory in the last trading session. Further back, the benchmark futures closed in the red in 3 out of the last 5 trading sessions.
In the Cash Markets, the DJIA fell 456 points led by losses in Caterpillar and United Technologies. However, the broad market index notched its largest one-day point (1086.25) gain in history on Wednesday. The day’s gain also marked the biggest upside move on a percentage (5%) basis for the benchmark since March 23, 2009, when it rose 5.8%.
US equities traded sharply lower on Thursday morning, giving back some of the strong gains from the previous trading session, amid renewed tensions between China and the U.S.
According to market sources, the U.S. President is considering an executive order to ban U.S. companies from using equipment built by Chinese firms Huawei and ZTE.
Meanwhile, China’s commerce ministry said earlier today that China and the U.S. have made plans for a face-to-face meeting over trade in January. Bloomberg reported on Wednesday that a U.S. trade team will travel to Beijing around the 7th of Jan. to hold talks with Chinese officials.
Stocks of trade bellwethers in the benchmark like Caterpillar and Boeing dived more than 1.5%.
Index-member JP Morgan Chase was down 1.34% at the time of writing. The move came after SEC announced on Wednesday that the investment bank will pay over $135 million to settle charges of mishandling pre-released American Depositary Receipts.
Other top losers in the Dow Jones include Coca-Cola (down 1.85%), Visa (down 1.8%), and Apple (down 2.29%) at the time of writing.
The Labor Department reported earlier today that Initial Jobless Claims fell by 1000 to 216,000 in the week ended 22nd December. The markets had forecast a reading of 217,000 for Jobless Claims. In addition, the CB Consumer Confidence for December also released earlier today came in at 128.1. The index was below the market expectation of 133.7.
On the technical front, the RSI is currently at 36.99% and suggests that the market can move in the downward direction. The current price is below the MA20 (23575). The current price is below the middle line of the Bollinger Bands and is heading downwards.
Overall Bias is Negative and Short-term trades can be initiated with tight Stop Loss and Take Profit targets.
Trade Suggestion-Limit Sell At 22550, Take Profit At 22350 Stop Loss At 22650