DJIA: positive momentum is maintained _07/07/2016

Trading recommendations

Buy in the market. Stop-Loss 17890. Take-Profit 18000, 18100, 18225, 18370

Sell ​​Stop 17870. Stop-Loss 17950. Take-Profit 17730, 17600, 17425, 17400, 17270, 17070, 17000, 16750

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Technical analysis

Since mid-February, the DJIA (Dow Jones Industrial Average) roses steadily recovering from the lows of the year near the mark of 15660 after a landslide decline in world stock markets at the beginning of the year.

By the end of April, the index completely blocked the fall and before the publication of results of the referendum in the UK in the "Black Friday" June 24 was close to the level of 18,100, which corresponded to a year ago and marks the current year highs.

On the outcome of the referendum in the UK index decline of nearly 6%, or more than 1,000 points, and in two days.

At the moment, the index Dow Jones Industrial Average back to around 17940, which corresponds approximately to the levels of the beginning of the year. The price is also above the key levels of support 17730 (EMA50 daily chart, EMA144, EMA200 on 4-hour chart), 17425 (EMA200 on the daily chart, the level of Fibonacci 100% retracement to a decrease in the current year).

With the opening of today's trading day, US stock indexes continued to develop the positive trend that began yesterday after the release of strong US PMI index of the service sector in June from the ISM, as well as the publication of reports from the last Fed meeting in June ( "minutes FOMC”). Fed officials have expressed a desire to wait for the other positive macroeconomic indicators in the United States before taking a decision on interest rates.

Indicators OsMA and Stochastic on the weekly, daily and 4-hour charts recommend long positions. On the daily chart indicators are also unfolding in long positions.

Price increases within the broad ascending channel on the weekly chart, the upper limit near the level of 18225. Near the mark 18370 are absolute maxima of 2015. In the case of the positive dynamics and the breakdown of the June high near 18100 mark is likely to achieve all-time highs in the near range of 1-2 years.

Much will depend not only on the recovery in investor risk appetite, but also from the Fed position in the US monetary policy issue. If the soft rhetoric by the Fed regarding interest rates in the US, as well as the receipt of positive economic data from the US continues, the US indices, including the index Dow Jones Industrial Average, continue to rise.

The reverse scenario is breakdown of support levels 17730, 17425, and the resumption of decline within the newly formed downtrend channel on the daily chart with the lower boundary near the mark 17070 (June lows).

Support levels: 17730, 17425, 17400, 17270, 17070, 17000

Resistance Levels: 18000, 18100, 18225, 18370

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Overview and Dynamics

Reduced concerns about the state of the global economy after Brexit and continued receipt of US positive macroeconomic data contribute to continued growth of US stock indices.

So, yesterday published PMI index for the non-productive sphere of the USA, presented by the Institute of Supply Management (the ISM), rose in June to the highest level since November (56.5 vs. 53.3 and 52.9 in May).

The US stock market also remained stable after the publication yesterday at 18:00 (GMT) minutes of the June meeting of the Fed, which showed differences in the leadership of the financial regulator with respect to the prospects for interest rates in the United States.

On Wednesday, the S & P500 index rose 11.18 points, or 0,5%, Nasdaq Composite - at 36.26 points, or 0.8%, while the Dow Jones Industrial Average - at 78.00 points, or 0.4%.

It seems that the impact of the results of the referendum in the UK is not felt as keenly in the United States, as in Europe and the UK.

Now, investors will closely monitor the release on Friday (12:30 GMT) on the US labor market data. According to the forecast expected a fairly high output (178, 000 new jobs created outside with / agricultural sector of the US economy), which indicates that the disappointing the May value (38 000 new jobs), the lowest since 2010, it was just a temporary deviation.

Positive NFP data indicate that the US economy is strong, despite the slow growth. And it will contribute to the further recovery of the US stock indices.

Negative NFP data will cause depreciation of the US dollar in the financial market.

 

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