DOW JONES FALLS BELOW MA5 ON TRADE CONCERNS AND CPI
DJ 30 futures are currently trading at 25794-lower by 0.03% as compared to the previous close. The contract closed in the negative territory in the last trading session also.
In the Cash Markets, the DJIA fell about 21 points at the time of writing. U.S. equities fell today as the U.S. President said there’s absolutely no need to rush on a trade agreement with China and tariffs will make the U.S. much stronger.
On Thursday, the benchmark index dropped about 139 points to close at 25,828.36 after falling by as many as 450 points earlier in the session.
Meanwhile, stocks cut some of their earlier session losses after Treasury Secretary Steven Mnuchin said China trade talks were constructive. The U.S. told China it had three to four weeks to come to an agreement or the White House would slap more tariffs, according to market sources.
U.S. President Donald Trump signaled in a Twitter post earlier today that he could stick with Chinese tariffs for a long period of time. The comments came after President Trump raised tariffs on $200 billion worth of Chinese goods from 10% to 25% at 12:01 am ET on Friday.
Companies that are hinging on a trade resolution fell on Friday. Caterpillar and Boeing declined 0.82% and 0.68% respectively at the time of writing.
Index-member Apple, which has growing China revenue exposure for the iPhone was down 1.76% at the time of writing.
Chipmakers also dropped on fears of an escalated trade war as the VanEck Vectors Semiconductor ETF is set for its worst week of the year and longest losing streak since October 2018.
Other top losers in the Dow Jones include Intel Corp (down 1.18%), United Technologies Corp (down 0.71%), and Merck & Co Inc. (down 0.67%) at the time of writing.
The 30-stock index is down more than 700 points for the week and on track for its worst week of 2019.
On the economic front, Core CPI (MoM) for April released earlier today came in at 0.1%. The CPI change was below the market expectation of 0.2%.
In addition, Real Earnings (MoM) for April also released earlier today came in at -0.4%. Earnings were below the consensus estimates of 0.2%.
On the technical front, the RSI is currently at 38.68% and suggests that the market can continue trading sideways. The current price is below the MA5. The %K has crossed the %D from above to the downside at around 69% and suggests that the market can move in the downward direction.
Overall Bias is Negative and Short-term trades can be initiated with tight Stop Loss and Take Profit targets.
Trade Suggestion-Limit Sell At 25825, Take Profit At 25735 Stop Loss At 25870