Wall Street ends on the front foot following trade talk optimism, DJIA on course for 26,000 territory, eyes on 26476

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  • The Nasdaq Composite put on around 6 points, or 0.1%, to close near 7,917.
  • DJIA added 114 points, or 0.4% to end near 25,942.
  •  The S&P 500 added around 11 points, or 0.4%, to end near 2,881.

Wall Street bounced back to pare back early trade tension losses to finish the day on Friday mostly higher. The S&P 500 added around 11 points, or 0.4%, to end near 2,881 for a weekly decline of 2.2%. The Dow Jones Industrial Average DJIA added 114 points, or 0.4% to end near 25,942 for a 2.1% weekly fall. The Nasdaq Composite put on around 6 points, or 0.1%, to close near 7,917, leaving it with a 3% weekly drop, suffering the biggest weekly declines of 2019.

Sino / US trade talks

As for trade updates, the Trump administration boosted tariffs on $200 billion of Chinese goods to 25% from 10% which initially weighed on U.S. stock prices although follwoing a late session update from Trump over Twitter, markets bounced back on optimistic remarks from the President when he said that that talks would continue and that tariffs “might or might not be removed” depending on future negotiations. Meanwhile, the decision to jack up tariffs on goods from China could be perceived as an excuse for the Fed to cut interest rates, which ultimately could take some of the sting out of trade wars had fueled, with one Fed policymaker, Bostic, suggesting he could be receptive if economic data deteriorates.

DJIA levels

Technically, the double Fibo confluence at 25522 which guarding 25300 (200 D SMA) and subsequent bullish daily stick shadows with slightly bullish divergence in stochastics enabled the index to continue in its northerly trajectory and running up to the near term target of just below 26000 at the 38.2% Fibo pointed out in yesterday’s analysis. An extension to the 26200 and Friday’s S1, 26227, is not out of the question at this point but bulls will need to surpass both the interim channel’s resistance and the 38.2% retracement level. This will place bulls back on top and at mid-week highs/resistance for a full recovery of the trade war agnst mid-week slide, albeit a little away from the start of the week’s opening high at 26476 which could be taken out on a bullish start tot he week depending on how positively any weekend trade headlines are taken. On the flip-side, a break all the way down to the 24800 gap area would come into target ahead of the 24500s and then 50% of the upside run made at the end of Dec at 24150.

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