Dow Jones Technical Analysis: Deepens its Losses – 19 September 2022

September 19, 202212 views0

The market was hoping at the beginning of last week that inflation had reached its peak and that the Federal Reserve would soon stop raising interest rates.

The Dow Jones Industrial Average declined by -0.45% in its recent trading at the intraday levels, to record new losses in its last session.The index dropped by 139.40 points, to settle at the end of the 30,822.43 level.On Thursday it declined by -0.56%, while during the past week, the index incurred sharp losses by 4.1%. This was the worst weekly trading since the week ended on August 26.

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The market was hoping at the beginning of last week that inflation had reached its peak and that the Federal Reserve would soon stop raising interest rates. However, Tuesday’s release of CPI data for August showed that inflation had not yet been tamed and sentiment was shattered, witnessing the three major indices have their worst day since 2020.

FedEx came out this weekend with a warning to investors of the risk of a recession. The company claimed that its earnings were horrific and that it would withdraw its full-year forecast. All this happened a week before the Fed meets to discuss the next rate hike, which will likely be another 0.75 percentage point.

In economic data released on Friday, the University of Michigan’s preliminary consumer confidence index rose to 59.5 in September from 58.2 in August. This was less than expected, as Bloomberg survey foresaw it to stand at 60. Respondents saw one-year inflation expectations at 4.6%, down from 4.8% in August, while five-year inflation expectations fell to 2.8%, dropping from 2.9%.

Technically, the index confirmed its recent trading of breaking the main 31,000 support level. This was considering the dominance of the corrective bearish trend in the short term along a slope line, with the continuation of negative pressure for its trading below the simple moving average for the previous 50 days. In addition to that, we notice the return of negative signals in the relative strength indicators, as shown in the attached chart for a time (daily).

Therefore, our negative expectations remain surrounding the index’s upcoming trading, especially throughout its stability below the 31,000 level, to target the pivotal support level 29,653.30.

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