Last
week, the US CPI came
basically in line with expectations, but the good news is that the Core M/M
reading once again printed at 0.2% or 0.16% unrounded. The not so good news is
that the US Initial Claims spiked
higher coming at 248K vs. 230K expected, but Continuing Claims remained strong.
We have already seen Claims spiking higher in the past months, but the overall
picture remains positive for now. The long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the week was positive. Nonetheless, the Dow
Jones finished the week negative and it’s hard to find a clear reason other
than a technical pullback or global growth worries.
Dow Jones Technical
Analysis – Daily Timeframe
Dow Jones Daily
On the daily chart, we can see that the Dow Jones
struggled to sustain the rally after breaking out of the key 35289 resistance and
started to pull back. The fall below the resistance might be a bad omen for the
bulls as a fakeout might lead to a big selloff. For now, the bullish trend
remains intact as the price will need to break the trendline to the
downside to confirm a fakeout. The price has recently bounced on the 38.2% Fibonacci retracement level as
the buyers are stepping in to target a new high. The last line of defence for
the buyers will be the trendline.
Dow Jones Technical
Analysis – 4 hour Timeframe
Dow Jones 4 hour
On the 4 hour chart, we can see that the price is
consolidating around the key 35289 resistance. We will likely need a
fundamental catalyst to end this rangebound price action and see a more
sustained trend.
Dow Jones Technical
Analysis – 1 hour Timeframe
Dow Jones 1 hour
On the 1 hour chart, we can see more
closely the range between the 35100 support and the 35600 resistance. A break
to the upside should see the buyers piling in and extend the rally to a new
high. On the other hand, a break to the downside should give the sellers more
control and lead to a quick fall into the trendline where the sellers will
target a breakout.
Upcoming Events
This week is a
bit empty on the data front and the lower summer liquidity might trigger false
moves. On Tuesday we will see the latest US Retail Sales report where the
market is likely to react positively in case of a beat and negatively in case
of a miss. The US Jobless Claims on Thursday is likely to be the main event of
the week as another big miss may cause recessionary fears and weaken the market
even more, while strong data should give the Dow Jones some support.