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The U.S. indices didn’t reveal any surprises during the past month. They kept their rising momentum and recorded fresh all-time highs, after a small slowdown in May. Dow Jones industrial average index rose 1.62% the previous month while S&P added 0.48% to its value. Both indicators locked their third winning month in a row and the seventh in the last eight months. The exception was the high-tech index, the Nasdaq Composite, which recorded losses of 0.94% in June and snapped a seven-month rising streak.  The Fed interest rate hike on June 14th left the stocks indifferent as it had been digested by the market earlier.

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The biggest single-day losses of the three most-known indices in June took place on June 29th, following strong sell-offs in technological stocks. Shares of Facebook, Amazon, Netflix, Apple and Google-parent Alphabet all dropped more than 1%. Chip stocks also fell, with Nvidia and Advanced Micro Devices closing at 3.3% and 4.8% lower, respectively. On that day, the blue-chip index closed at 168 points down, with Apple, Boeing, and 3M contributing most to the losses, while during the trading session it briefly fell more than 250 points. The S&P 500 dropped 0.9% while the Nasdaq Composite index fell 1.4%.

The driver of the S&P500 last month was the financial sector, which added total gains of 6.7% at its stocks, followed by health care with a 2.5% increase. On the other hand, technology stocks and utilities declined almost 5.0% each, followed by consumer staples stocks which fell more than 4.0%.

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Looking at the longer term, the three U.S. indices ended the first half of the year with strong gains and with no signals for a trend reversal. S&P 500 ran 8.2% in the first six months of 2017, its best half-year since 2013. Dow Jones gained 8.0% for the same period while the tech-heavy index Nasdaq Composite books gains of 14.1%.

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Dow Jones Industrial Average Posted Three Bullish Months in a Row
The Dow Jones Industrial Average has been trading in an ascending move since November 2016 and added at its value more than 18% since then. In June, the U.S. index recorded a fresh all-time high at 21,562 following the aggressive run that started after the strong rebound on the 17,480 support barrier. Going to the short-term timeframe, the blue-chip stock index recorded three winning monthly sessions in a row and is moving towards the aforementioned all-time high. If the price surpasses the 21,562 resistance, it will open the way for a further bullish movement with new highs. An alternative scenario is a slip below the rising trend line until the 21,065 support handle.

Looking on the same chart, the technical indicators are biased slightly higher. The Relative Strength Index (RSI) is rising after the pullback on the 50 level and is approaching the overbought area. Furthermore, the MACD oscillator is moving in the positive territory beneath the trigger line.

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S&P 500 Kept Neutral Momentum the Last Five Weeks
On a long-term basis, the S&P 500 index has been developing in an uptrend for more than seven months, climbing 10% and recording an all-time high at the 2454 resistance level. Over the last five weeks, the price is trading in a consolidation area with lower boundary the 2402 support barrier and upper boundary the 2454 resistance level. The pullback on the trend line helped the price to jump slightly higher.

Technically, on the daily chart, the indicators seem to be weak. The Relative Strength Index (RSI) is moving near its mid-level whilst the MACD oscillator is falling near the zero line. Additionally, the stochastic oscillator is moving within the 20 and 80 levels and created a bullish crossover within its moving averages with 50-day SMA moving slightly below the price. Our expectation is a hit of the previous all-time high.

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Nasdaq Created a Sharp Sell-Off Since June
The Nasdaq Composite index, following the bounce off the all-time high at 5897, started a sharp sell-off, indicating a pause for further upside movement. The price plunged more than 1.4% since June and is developing towards the 5546 support barrier. Also, the index slipped beneath the 50-day SMA and is trading near the 100-day SMA. The initial target to have in mind is the 50-day SMA, 5729 resistance level to the upside, if the price starts an upward movement. On the other hand, if the index slips below 5546, it will challenge 5482.

On the daily chart, the technical indicators are confirming the recent bearish attitude. The RSI indicator plunged below the 50 level whilst the MACD oscillator is strengthening in the negative territory sharp below the mid-level.

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U.S. Indices are rising again after the slowdown which came from the uncertainty of Trump’s administration. After almost a month of sideways movement, the U.S. indices seem to gain again momentum for creating new highs. Federal Open Market Committee repeated that an interest rate hike is coming soon and the majority of the market participants expects the Federal Reserve to raise rates in June with a chance of more than 80% as per CME FedWatch Tool. FOMC minutes from the policy meeting that took place on May 2-3, released yesterday. The committee left funds target rate unchanged at 0.75% to 1% and hinted that a rate hike is still on the table, bolstering the U.S. stocks. However, they put as a condition the next economic data that would be released to be in line with their expectations and they mentioned that “it would be prudent” to wait for evidence that a recent slowdown in economic activity had been transitory.

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During the last month, technology had been the most gainful sector among S&P 500 components, adding more than 4%, while the second in row sector added less than half of these gains. On the other hand, the weaker sector was energy which lost 0.67% during the last month. Though OPEC’s move to extend output cuts by nine months will reverse these losses soon.

Dow Jones Will Extend its Gains Soon
The Dow Jones Industrial Average is developing in an ascending move since November of 2016 and added at its value more than 11% since then. In March the U.S. index recorded a fresh all-time high at 21,171.40 following the aggressive run that started after the strong rebound on the 17,470 support barrier. Going to the short-term timeframe, the blue-chip stock index recorded six winning daily sessions in a row and is moving towards the aforementioned all-time high. If the price surpasses the 21,171.40 resistance, it will open the way for a further bullish movement with new highs. An alternative scenario is a slip below the rising trend line until the 20,140 support handle.

Looking on the same chart, the technical indicators are biased sharply higher. The Relative Strength Index (RSI) is rising with strong momentum and is approaching the overbought area. Furthermore, the MACD oscillator climbed above its trigger line while it is following a positive path.

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S&P 500 Recorded a Fresh All-Time High
The S&P 500 index posted a new all-time high at 2413,48 today and surged almost 3% over the last six trading sessions. Moreover, it is in progress to record the seventh consecutive positive day and we are waiting for further upside movement while is also ready to create the second green month in a row. The price is developing well above the three simple moving averages (50, 100 and 200) on the daily chart indicating a continuation of the recent tendency. The sharp uptrend started since November of 2016 and we have no signals for a big retracement. The technical indicators are also confirming the bullish move. The RSI indicator is moving towards the 70 level and is strengthening while the MACD oscillator is moving above both, its trigger and zero lines.

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The three most popular U.S. indices got over the period that were recording continuously all-time record highs and entered a retracement phase. Dow Jones Industrial average is down more than 1.20% to 20,372.00 so far, in April, while it slipped 0.72% in March after its top at 21,171.40. S&P 500 sank over 1% to 2325.62 in April, coming from marginal losses the previous month. The two indices have a similar performance which accelerated to the downside in the current period of earnings releases.

Dow Jones Industrial Average – Technical Outlook
The Dow Jones Industrial Average started a retracement after the bounce off the fresh all-time high at 21171.40 which recorded early in the previous month. Since March the index plummeted almost 800 points and posted a two-month low at 20,372.00 which overlaps with the 100-daily SMA. Currently, the price is approaching the 23.6% Fibonacci retracement level with low at 17,060.00 and high at 21,171.00, near 20,203.00.

However, if the price rebounds on the aforementioned SMA, we would expect a run towards the 20,890.00 resistance barrier. The technical indicators seem to be in contrast. The Relative Strength Index (RSI) is holding in the negative territory and is sloping to the upside whilst the MACD oscillator plunged below its trigger line with strong momentum.
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Worst-Performing Blue Chip Stocks of the Month
The biggest pull to the downside of the Dow Jones Industrial Average was Goldman Sachs (NYSE: GS; $214.07) which dropped more than 8% in a month. The earnings report of the company for the first quarter of 2017, released on April 18th, revealed that EPS were $5.15, below estimations of $5.27 plunging the share price.
The second worst performing stock is not far away. International Business Machines (NYSE: IBM; $161.65), the fifth-most influential company in Dow Jones, dropped 7% the last month, and had a big impact on the index’s performance. The American multinational technology company reported net income of $1.75 billion, or $1.85 a share in the first quarter of the year, compared with $2 billion, or $2.09 a share, in the year-earlier period. Even though the company reported earnings of $2.38 a share versus $2.35 expected, it was not enough to support the stock price. Following the report, IBM stock had the biggest one-day drop since June leading the price at its weakest level since December.

IBM (NYSE: IBM) – Technical Outlook
The IMB stock opened with a gap to the downside over yesterday’s trading session and managed to challenge the short-term ascending trend line. Additionally, it should be noted that the short-term rising trend line, which dates back in June of 2016, continues to provide a significant support to the price action. The price after the sell-off hit the 50.0% Fibonacci retracement level with low at $145.45 and high at $182.75 and if the price surpasses the $162.60 resistance level, it will open the door for $165.00 which overlaps with the 200-daily SMA. On the other hand, a continuation of the free fall will expose the stock price towards 61.8% fibo level at $158.00. The technical indicators are confirming our second thought as both are holding in oversold areas. The MACD oscillator declined below its trigger line while the RSI indicator lies below the 30 level.

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Best-Performing Blue Chip Stocks of the Month
On the other hand, the best performed stock of the blue-chip index, the last month, was the Wal-Mart Stores (NYSE: WMT; $74.07) which is an American multinational retailing corporation that operates as a chain of hypermarkets, discount department stores, and grocery stores. The stock surged almost 6% in this period, while the second in order best performed stock was McDonald’s Corporation (NYSE: MCD; $132.62) which soared slightly more than 3%.
Both stocks gained its upward strength from its strong earnings report for Q1. The Wal-Mart Stores announced quarterly earnings of $1.3 a share versus $0.97 a share expected whilst the McDonald’s earnings per share beat also the predictions and rose at $1.43 against $1.33 expected.

Best and Worst Performing Stocks of S&P 500 & Nasdaq Composite
The S&P 500 index plunged more than 1% so far this month following the rebound on the all-time high at 2401.28. The index started a retracement to the downside in April and one of the companies that influenced negatively the index is IBM and Goldman Sachs mentioned above.
The Nasdaq Composite Index is not performing like the other two popular U.S. indices, Dow Jones and S&P 500. The high-index exposed sharply higher in the previous five months and added at its value almost 13% while in the current month the price recorded a fresh all-time high at 5480. In the current month, the stock is slipped 0.43% so far. The stock with the highest positive performance included among the stock components was HTG Molecular Diagnostics (NASDAQ: HTGM; $5.51) which jumped more than 186%.

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The U.S. stocks suffered its biggest one-day fall since U.S. elections in November, on Tuesday, as market participants worry whether President Donald Trump will manage to get the votes needed from the congress to apply the infrastructure and tax reforms promised in order to bring fiscal boost. On Tuesday, Trump attempted to pass a health care bill (repeal Obamacare) through congress and revealed that it will take more time that estimated and policymakers may not even vote for it, which bring into question whether he has the ability to pass other reforms scheduled in his agenda. These key reforms were the reason behind Trump’s rally in the stock markets and prospects that may delay or never happen was a strong punch.

The blue-chip index, Dow Jones industrial average dropped 1.14%, 237.85 points down ending the daily session at 20,668.00 while Nasdaq Composite plunged 1.83%, 107.70 points lower at 5,793.83. The S&P 500 also experience severe losses of 1.14% or 29.45 points ending Tuesday’s trading session at 2,344.02. All of the three indices ended last year with gains above solid gains above 10% and continued to rise apace the first two months recording gains over 5% each. However, March seems to be a weak month for the U.S. indices. A number of below forecasts earnings report from various firms and the last concerns for U.S. administration turned the monthly performance of the three most popular indices negative.

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Federal Reserves’ decision to raise fund rates by 25 basis points to 1.0% in the last policy meeting in March failed to have a big immediate impact on the stocks as we believe that the market had already digested this rate hike. Market participants were rather focused to gauge the number of rate hikes will happen until the end of the year and when. On Thursday, Fed Chair Janet Yellen’s speech will attract important attention from traders. Next week, on Thursday, March 30, U.S. GDP will be in focus. Apart from the two mentioned scheduled events and the political developments regarding Trump’s reforms approval, there are no other market driver forces planned yet for March.

Dow Jones Industrial Average – Technical Outlook
The Dow Jones Industrial Average fell sharply since Tuesday’s period and plunged around 390 points. The index during the previous session was trading sideways recently after the aggressive run to the upside following the strong rebound on the 17,470.00 support level. Currently, the price is trading below the 20,780.00 barrier and is slightly above the 50-daily SMA.

The initial target to the downside is the 20,140.00 critical level which overlaps with the 200-daily SMA and with the 23.6% Fibonacci retracement level of the last big upward move with low on June 26th of 2016 at 17,070.00 and high on March 1st of 2017 at 21,171.00 the all-time high. An alternative scenario is a jump above the 20,780.00 resistance handle which it will open the door for a retest of the latter level.

Technical indicators on the medium-term timeframe seem to be in agreement with the negative thought. The RSI indicator is falling after the bounce off the overbought area and is approaching the positive territory. The MACD oscillator is still moving on a bullish path, however, is in progress to create a bearish crossover with its trigger line. On the short-term chart, both MACD and RSI are falling with strong momentum.

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S&P 500 – Technical Outlook
The S&P 500 index it is on track to snap a four-month winning streak with a near 0.85% losses so far this month. The index is moving sharply higher after the pullback from the 2,401.28 resistance level and probably is ready to create a correction to the downside. On Tuesday, the price printed a violent sell-off and plunged below the 2,350.00 barrier and the lower band of the Bollinger band indicating further declining.

From the technical point of view, on the daily chart, the price hit the 50-SMA and seems that it found an obstacle before it continues its downward movement. The RSI indicator fell below the 50 level, however, now, is pointing upwards. The MACD oscillator is dropping and is approaching the zero line. The next level to watch is the 2,300.00 strong psychological level which is slightly above the 100-SMA. If the price surpasses 2,350.00 then, it will challenge the aforementioned high.

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The three most popular U.S indices are on new all-time record highs again! U.S. President Trump promised to deliver soon a phenomenal tax plan and in combination with his pre-election promises for tax cuts, the perspective of the plan culminated the U.S. stock market.

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Since November, when the United States elected Donald Trump as the new President, S&P 500 picked up 9.2%, Dow Jones rose 12.0% and Nasdaq Composite added 10.7%. Trump has as priority to improve country’s infrastructure and help the economy create more jobs. On Monday, February 13th, the total value of the shares in S&P 500 topped $20 trillion for the first time ever. The earning reports of the major companies are keep coming out better than expected, pushing further the stocks. In the new year, all of the S&P 500 sectors advanced, with only exception the energy sector which hit from oil production cuts.

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Currently, we all expect Fed Chair Janet Yellen semi-annual testimony on the economy amid the prospect of a major tax plan announcement from Trump in the coming days. Yellen will testify on the economy and the monetary policy before the Senate and House committees in Washington DC today at 15:00 GMT, while tomorrow, she will testify before the Senate Banking Committee at the same time. There are no big changes in the economy since December, however, given that the most popular U.S. indices are recording fresh all-time highs and the treasury yields picked up, we would expect Yellen to be generally optimistic. The economy speeded its pace of expansion for the second consecutive quarter in Q4, at 1.9% annually, while inflation finally reached the strongly eyed 2% Fed’s target and edged higher to 2.1% year-over-year for the month of December. The jobless rate remains at very low levels, below 5%, while the economy still adds a significant number of jobs monthly despite the minimal but positive wage growth. In addition, the manufacturing and industrial sectors continue to expand on a steady pace in the last quarter of the year.

Dow Jones Industrial Average – Technical Outlook
The Dow Jones Industrial Average traded sharply higher since November, adding more than 12% at its value. Currently, it is recording the fourth bullish month in a row and during the Monday's trading session, February 13th, the index printed a fresh all-time high at 20,440.80 price level.

On a long-term basis, the price is moving upwards aggressively after the bounce off the 17,470 strong support barrier and we expect further rise for a new high. The technical structure still suggests an incline move as the moving averages, on all timeframes, are pointing to the upside. On the daily timeframe, the RSI indicator is following an overbought path, however, over the last few sessions is flattening. The MACD oscillator is moving higher above the trigger and zero lines with strong momentum. 

An alternative scenario is the beginning of a downward correction. If the price starts a retracement and slips below the 50-daily SMA which is near the 20,000 strong psychological level, it would open the door for the 19,720 barrier.

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S&P 500 – Technical Outlook
The S&P 500 index surged more than 9% since last November and is recording, for several days, new all-time highs. In the previous trading period, it printed another new high at 2331 and created the fifth green consecutive day. Moreover, currently, the price is trying to create the fourth positive month in a row after it met the 2031 support level.  

On a short-term basis, the index is developing in an ascending move and the next level to watch is a fresh all-time high. On the other hand, if the price drops below the rising trend line, it would open the way for a decline until the 2266 support handle which overlaps with the 23.6% Fibonacci retracement level of the big upward move from the low on November 9th, 2016 until the high on February 12th, 2017. Technical indicators are still moving into positive territory. The RSI indicator approached the 70 level and surpassed it while the MACD oscillator rose above its trigger line and is strengthening.

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NASDAQ – Technical Outlook
The high-tech index is currently printing the fourth green month in a row and is creating a fresh all-time high near the 5262 price level. The index started the aggressive upward movement following the rebound on the 4850 support barrier and rose more than 10% since last November. Our expectation is a further upside potential move above the previous all-time high. A new high is very likely in the near future, as well as, in the other indices.

Technically, the moving averages are moving higher, approaching the current market price. Technical indicators are endorsing the recent upward momentum as both are holding in a positive area. The RSI indicator lies in the overbought area and is still rising while MACD jumped above its trigger line and confirms the bullish price action.

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Ahead of earnings season, Dow Jones is finding strong resistance on the 20,000 level while Nasdaq and S&P500 are posting all-time record highs. Last year the biggest boost on the U.S. indices came from the energy sector which added more than 34% followed by financial sector with gains slight lower than 30%. It’s remarkable that all the sectors managed to end the year with positive performance, showing that it was a really good year for the stocks despite the bad beginning. Last January, traders were talking about a possible crisis as all the three most popular U.S. indices plunged. The S&P500 has fallen 5.07%, Dow Jones 5.50% and Nasdaq by most 7.86%. However, they didn’t only cover their losses but achieved to close with gains over 10% each. As you can see below, S&P500 advanced by 11.01%, Dow Jones 14.15% while Nasdaq rose 10.47%.

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The Dow Jones Industrial Average rose 14.15% in 2016 and stacked below 20,000 missing the momentum to rise further. Many traders have already their long positions and as no one is entering the market now, the index cannot find the push it needs to surpass the strong psychological level of 20,000. The earnings season ahead and the changes will take place over the Donald Trump’s presidency, may stimulate the index further. On the shorter term, the Trump’s first press conference later in the afternoon today could create volatility. The U.S. President-elect is expected to give clues if he will deliver his promises for cutting taxes and raising spending.

During the last month, Apple (NASDAQ: AAPL) was the biggest drag of the blue chip index, adding more than 5.00% at its value, followed by American Express (NYSE: AXP) which rose 4.17%. In contrast, Exxon Mobil (NYSE: XOM) was the biggest pull of the index to the downside with losses around 5.60%, and second in line the Wal-Mart Stores (NYSE: WMT) which fall 4.80%.

Nasdaq Composite Index added 10.47% in 2016 but the remarkable thing of the tech-heavy index is the creation of its longest streak of all-time record closes since 1999 in a series of six consecutive daily candles. Meanwhile, the S&P500 is experiencing a flat period the last few days, as it closes around 2,280 without significant moves.

Dow Jones Industrial Average – Technical Outlook
After the aggressive rally that created early in the previous month on DJIA, now we can see a brief period of consolidation before the continuation of the upward movement. Over the last four weeks, the index has established and traded within a sideways channel with lower boundary the 19,720 support level and upper boundary the 20,000 strong psychological level. A break in either direction will expose the price to challenge new highs, or otherwise to start a retracement until the Fibonacci retracement level 23.6% (low of June 2016 with high January 2017) which is near the 19,300 support barrier. Also, if there is a downward move, the price needs to go through the 50-daily SMA which acts as a significant support handle.

From a technical point of view, the technical indicators are confirming the bearish scenario as both are moving slightly lower. The Relative Strength Index (RSI) plunged below the 70 level and is pointing downwards approaching the 50 level. The MACD oscillator is falling as it is holding below its trigger line, however, it still lies above the zero line. 

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S&P 500 – Technical Outlook
The S&P 500 index edged sharply higher since last November and was recording for several days new all-time highs. The price surged more than 6% over the last three months, however, a small retracement to the downside is possible. The index hit the 2181 price level and rebounded on it while the price is moving lower from its fresh high.

The next level to watch would be the 2232 support barrier which overlaps with the 50-daily SMA or moreover the 2213 obstacle which coincides with the Fibonacci retracement level 23.6% (low June 2016 with high January 2017). Despite that, the three SMAs (50, 100 and 200 SMAs) are sloping upwards, the technical indicators are moving lower. The RSI indicator is moving towards the 50 level while the MACD oscillator fell below the trigger line and is weakening the last couple of days.

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Nasdaq Composite Index – Technical Outlook
The high-tech index is currently printing the third green month in a row as it is created a fresh all-time high at 5050.48 during yesterday’s session. The index started the aggressive rally following the strong rebound from the 4850 support barrier which coincides with the 50 and 100 SMAs on the daily chart. Also, the price rose more than 3.8% over the last three months while the next initial target would be a new high if there is a break above the 5050.48. Otherwise, a failed attempt will move the price to move south or sideways.

Technical indicators are endorsing the recent upward momentum except for stochastic oscillator which created a bearish crossover with its moving averages. RSI indicator is following a positive path while MACD lies above both, its trigger and zero lines. 

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Below you can find the most important earnings releases in January:

2017 01 10 16 26 04 Stock100117 Excel

The U.S. indices are continuously creating new highs while they are trading around three shafts:

  1. Donald’ Trumps Election

  2. Oil Production Cut

  3. Prospect Fed will Raise Rates

 

It’s remarkable, that the week just past was the best week for the U.S. indices since U.S. elections, and the one it starts today promises to keep volatility high. Dow Jones recorded its fifth straight winning week while it added 3.31% so far this month, following solid gains of 5.41% in November. The S&P500 is also up for the month by 2.76% after 3.42% gains the previous month, on the back of a strong pull from the financial and energy sectors. Fewer gains but not negligible posted by Nasdaq, which climbed 2.27% in the first ten trading days of December, and 2.59% the month before.

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All the three indices are about to end the year with strong increases, mainly dragged up by energy sector while the health sector has been the weakest in 2016. The blue-chip index is up 13.38%, slightly below 20,000 while the S&P500 enjoys gains of 10.55% for the year, being around 2,260. Last but not least, the high-tech index Nasdaq rose 8.72% for 2016, until now.

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Firstly, Donald Trump’s election as the next U.S. president was a benefit for the three most popular U.S. indices, as Trump plans include power up of the inside U.S. economy and in turn boost of the U.S. stock market. Moreover, the agreement for oil output cut had a similar vigorous impact as Trump’s win.

Oil jumped to the highest level since July 2015 at the week’s opening as non-OPEC countries joined the deal for oil production cut and Saudi Arabia signaled deeper cuts! At the last OPEC meeting on November 30th, the countries reached a deal to cut oil production for the first time in eight years, sending the stocks to new record high levels. S&P500 and Dow Jones favored once again by non-OPEC and Saudi Arabia willingness to make further cuts in oil output.

The two-day FOMC meeting starts tomorrow and may add pressure to the stocks. If Federal Reserve finally put the raise button, for an increase of 25bp at its 0.25%-0.50% funds rate range, and signal more rates hikes to come, traders may turn bearish. This meeting will be the catalyst for the tone of the markets for the next months. It’s noteworthy, that according to the FedWatch Tool of CME Group, there is a probability of 97.2% Fed to increase borrowing rates.

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Dow Jones Industrial Average (DJIA) – Technical Outlook
The Dow Jones Industrial Average has an aggressive roller coaster run since last month, after the announcement of Trump’s winning in the U.S. Presidential elections. The index surged more than 9% since November and recorded an all-time fresh high at 19,873.50 following the strong rebound on the 17,470 support barrier. Currently, the blue-chip index is developing near its high at 19,790.00. The Fed interest rate decision on Wednesday is likely to have a direct effect on the index. If the price penetrates the all-time high at 19,873.50, then the index will print a new one. Otherwise, a correction to the downside is possible until the 19,177.00 support barrier.

From a technical point of view, the blue chip index continues trading above its moving averages while the 50-SMA had a bullish crossover with the 100-SMA, on the daily chart, in the previous days. The RSI indicator is moving in an overbought area, however, is pointing downwards. The MACD oscillator is rising and is still holding in a positive territory above its trigger line.

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S&P 500 – Technical Outlook
The S&P 500 index climbed to an all-time high in December and challenged the 2,270.60 price level. Since last month, the index surged more than 6% following the significant bounce off the 2,030.00 support level. The index is developing in an ascending move over the last five years and the technical structure remains bullish in a long-term timeframe. 

From a technical point of view, on the daily chart, the price is trading near the previous all-time high and if there is a penetration of the latter level, will expose the index to a fresh high. Otherwise, if the price failed to surpass the aforementioned obstacles, it will slip near the 2,113.80. Technical indicators seem to be in agreement with the bullish attitude as both are moving within a positive path. However, the Relative Strength Index (RSI) is pointing downwards near the 70 level whilst the MACD oscillator is moving above its trigger and zero lines.

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NASDAQ – Technical Outlook
Over the last three months, the Nasdaq Composite index is moving in an uptrend move within a rising sloping channel and currently the price is developing near the 4,877.00 price level. Over the last six days, the index jumped more than 3.4% and is approaching the previous all-time high at 4,923.90. Additionally, a break above the latter level will open the way for a new high. On the other hand, the price may plunge below the 4,800.00 barrier which overlaps with the 50 and 100 SMAs, on the daily chart, and will meet the uptrend line near the 4,700.00 obstacle. The RSI indicator is following a bullish area while it is falling and the MACD oscillator is rising above its zero and trigger lines.

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Wednesday, 19.10.2016, 07:44

U.S. Indices Report: October

Written by
Published in Stock Markets Insight

U.S. indices have been consolidating around their all-time highs over the last couple of months as investors look at several factors which could give a trend direction in the coming months. This includes the last two Federal Reserve (Fed) policy meetings for this year, the strong dollar, the third quarter earnings, the U.S. indices that are set to deliver the third consecutive month of decline and of course the U.S. presidential elections on November 08.

The Fed keeps its main interest rate unchanged at 0.5% since last December when interest rates were raised for the first time in more than a decade. The next policy meeting is on November 2nd, a week before the U.S. presidential elections, and will not be accompanied by a press conference. Thus, we wouldn’t expect the Fed to make any changes in the monetary policy then; in contrast, all investors will turn their attention to the elections result.

The limelight for the Fed rates is on December 14th. Many market participants believe that the U.S. central bank is likely to lift rates then, if the data coming out for the economy keeps its strength, as Fed members had signalled. However, Fed Chair Yellen and Vice Chair Fischer at their last press conferences changed their tone and tried to convince the market that raising rates is not that simple. Raising rates based on employment and inflation may be premature given the state of the global economy. Moreover, low rates help the U.S. economy to gather some steam to pick up its recovery pace, improve labor market participation and business investment.

Strong Dollar Hurts U.S. Economy
The U.S. dollar has been moving north over the last three years, climbing to 31-year highs against the sterling while it maintained its gains against the euro and yen. While the strong dollar is a positive for Americans who travel overseas, it is bad for multinational American companies who are dealing with international business, as it makes U.S. exports and products more expensive to foreign buyers and reduces the conversion of foreign profits from foreign currencies into dollars. Over the last few years, many developed countries, such as the Eurozone, U.K. China and Japan, have devaluated their currencies making their exports more attractive to foreign buyers. Therefore, a stronger currency hurts company earnings and if corporations haven't hedged overseas profits, this translates into fewer dollars which could have a strong effect on the next few quarters’ revenues.   

Important Earnings to Watch until next Fed meeting:
Oct 20 – Microsoft | Verizon
Oct 21 – McDonald's | General Elec
Oct 25 – Apple | Alibaba
Oct 27 – Alphabet (Google) | Amazon
Oct 28 – Exxon Mobil
Nov 02 – Facebook

Dow Jones Record is Threaten to Be Broken
The Dow Jones Industrial Average is trading down -1.20% so far this month and is on the verge of tallying three consecutive months of declines. If the Dow Jones closes red in October it would be the first time since September 2011 when the blue-chip index fell for five months in a row. During the May - September 2011 period, the index recorded losses of more than 15%.  On Thursday 13th, the index hit a low below the key support level of 18000, which includes the 200-day SMA before bouncing back.

A similar story for the S&P 500 index which is also trading down -1.93% so far this month with October shaping up to be the ugliest monthly fall since January; the month after the Federal Reserve raised rates for the first time in a decade. If the index finishes negative in October, it would be the first time since February when the index fell 7% within a three-month period. 

It should be noted that both of the indices, the Dow and S&P 500, kept their year-to-date gains, 3.85% and 4.05%, respectively.

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U.S. Presidential Elections Will Not Affect the Stock Market
The election is making a lot of investors anxious and as we get closer to the U.S. Presidential elections we could see some bigger swings in the U.S. stock market. In our point of view, it really doesn’t matter who fills in the blank – whether it’s Trump or Clinton - as we don’t believe that whoever wins the White House will make any long-term difference to the U.S. stock market. There is no past evidence to suggest otherwise and, on top of that, there are a bunch of other factors (not wholly connected to the President’s tenure) that influences what happens to the stock market.   

However, let’s have a look at the average returns of Down Jones under the last three American Presidents, including Ronald Reagan. While U.S. President Bill Clinton holds the baton, George W. Bush saw a negative market returns during his tenure. Moreover, during President Obama’s tenure the stock market experienced strong gains, similar with President Reagan’s tenure. 

Oct2016

Dow Jones and S&P 500 Technical Outlook
The Dow Jones Industrial Average has been establishing an ascending move since January 2016, however, from June the price is moving in a trading range, divided into two phases. The index challenged the all-time high at 18664 and now is trading near the 18185 price level slightly below the 100-SMA on the 4-hour chart.

The first consolidation area started from July and broke to the downside the strong support zone 18252 – 18337 in September. The second phase started after the aggressive sell-off during the penetration of the previous range. Currently, the price is developing between the 17950 support barrier and the 18405 resistance obstacle. A break above the latter level will open the door for a retest of the 18405 region and the previous all-time high at 18664. On the other side, if the price lips below the lower band of the second phase of the trading range will then challenge the next support level at 17705.

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The S&P500 is trading in an uptrend since January 2016 and gained more than 4% following the rebound on the 1807 support level. During August, the price challenged the all-time high at 2193 and currently is trading in a sideways channel after the pullback from the fresh high.

Technically, the price is establishing below the short-term falling trend line which seems to be a strong resistance for the bulls and is slightly above the 50 and 100 daily SMAs. The next level to watch out for is the 2180 resistance barrier which is our first target in the short-term. Beyond that level, we have set the 2193 obstacle as our second target. Moreover, a penetration of the latter level will expose the price to record new highs. The RSI oscillator is endorsing the bullish thought as it is sloping upwards, near the 50 level. 

On the other hand, the strong support zone at 2106 – 2113 which coincides with the 200-daily SMA and the 23.6% Fibonacci level is a significant area for the bears. A break below the aforementioned obstacle will open the way for the 1952 support level which is near with the 61.8% Fibonacci level.

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Wednesday, 05.10.2016, 08:06

Stock Of The Month: DBK

Written by
Published in Stock Markets Insight

Deutsche Bank (XETRA: DBK.D) has been the main topic of discussion across the financial world over the last 2 weeks. Its shares have dropped more than 60% since August 2015 and hit a new record low on Tuesday, at 9.90 euros. 

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EPS analysis

TechnRecom GSDeutsche Bank shares (DBK) plunged more than 12% in September, falling down to a historical low at 9.90. Shares of Deutsche Bank hit a new record low on Tuesday before recovering some of their gains in afternoon trading. The German lender's stock has been on a wild ride in recent months and dipped below the significant level of 20.00 a year ago. Since November 2015, the shares of the German bank are trading 54% lower and suffered a humbling 90% decline since reaching a pre-financial crisis peak in April 2007.

The daily chart below shows that the German lender’s stock has been in a clear downtrend throughout 2016. The ability of the sellers to maintain the price action below the 13.80 level is key to understanding where the price looks set to go. The stock still faces significant resistance just above this month’s highs of 13.80. The first of these comes around 12.50, the 61.8% retracement of the move from November 2015 highs to October 2016 lows, the daily 50-SMA and 100-SMA and the descending trend line. If we see the first of these taken out, it would be an extremely bullish signal for the stock and could be quickly followed by a break through the other four obstacles.

The outlook is now starting to become a little uncertain, following the aggressive rebound from the 9.90 region, but as long as we stay below the aforementioned obstacles then a move to fresh lows remains possible. Furthermore, the daily chart shows that all of the moving averages are heading lower, supporting the ongoing bearish tone, while the technical indicators maintain bearish slopes below their mid-levels.

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FundHigh GSDeutsche Bank (DBK.D) has been the main topic of discussion across the financial world over the last 2 weeks. Its shares have dropped more than 60% since August 2015 and hit a new record low on Tuesday, at 9.90 euros. DBK’s shares didn't trade in Germany on Monday because of a public holiday. The sharp fall of the German lender’s shares the last 3 years raised concerns about its survival. The European banking sector is currently facing significant problems, with sluggish growth throughout the major European countries, with ECB holding in negative rates since June 2014, and tougher banking regulations creating additional challenges to Deutsche bank. As we can see on the performance chart below, its shares fell more than 75% over the last 3 years.

In June 2016, Deutsche bank’s U.S. unit failed the U.S. Federal Reserve’s annual stress test and narrowly passed the European Banking Authority’s (EBA) stress test. Now, the German global banking and financial services company is attempting to settle a fine up to $14 billion to the U.S. Department of Justice for 'mis-selling' mortgaged-backed securities. Investors fear that the expense would cripple the bank financially. Germany’s largest bank has a market capitalisation of only about €15.8 billion ($17.89 billion) and would almost certainly have to raise fresh cash to pay the Department of Justice demand in full. It should be noted that recent reports say that the German government is not planning to save the country’s biggest lender, but will monitor the situation more closely.

Last week, Deutsche Bank CEO, John Cryan, revealed strong financial fundamentals that calmed the market, helping the stock to take some breaths. The central bank is trying to negotiate the fine with the U.S. Justice Department to buy some more time for restructuring. In the meantime, Deutsche Bank is also trying to sell assets in an effort to raise capital. For example, last Wednesday, the bank announced that the British insurance business Abbey Life will be sold to Phoenix Group for 935 million pounds ($1.2 billion).

Performance

Annual Financial Summary

Statement2003

CompDescr GSDeutsche Bank AG or German Bank, as it is widely known, is a German global banking and financial services company headquartered in the Deutsche Bank Twin Towers in Frankfurt, Germany. It was founded in 1870 in Berlin as a specialist bank for foreign trade. In 2009, the bank was the largest FX dealer in the world with a 1% market share. The Bank is engaged in providing commercial and investment banking, retail banking, transaction banking and asset and wealth management products and services to corporations, governments, institutional investors, small and medium-sized businesses, and private individuals. The bank has more than 100,000 employees across 70 countries.

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Competitors

Tuesday, 13.09.2016, 13:15

U.S. Indices Report: September

Written by
Published in Stock Markets Insight

The three major U.S. stock indices surrender their strongest gains in two months with investors reluctant to push the markets higher ahead of the two-day FOMC meeting on September 20-21. The Federal Reserve’s decision has become the subject of intense market speculation in recent days. In our view, there's not enough ammunition for a September rate rise as inflation is holding below the Fed’s 2% target and the unemployment rate has slightly changed in recent months, as it remained 4.9% for the third straight month. The pace of hiring in the U.S. slowed sharply in August after huge gains earlier in the summer. The U.S. Labor Department said hiring rose by 151,000 jobs last month, sharply down from an upwardly revised 275,000 increase in July and a 271,000 gain in June. Moreover, the U.S. manufacturing plunged in August to a level indicating activity has shrunk, another sign of the difficulties in the factory sector. The Institute for Supply Management stated on Thursday that its manufacturing index in August fell to 49.4% from 52.6% last month, below the expectation for a 52% reading. Any reading below 50% indicates contraction, and the index was below that level for the first time since February.

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In her last speech, Fed’s Brainard maintained a dovish tone on the general U.S. economic performance. The FOMC voter casted doubt on a rate hike in September and said that the central bank should avoid removing support for the economy too quickly. She added that the U.S. economy looks vulnerable to external economic weakness and the best scenario is to have a stronger increase in U.S. consumer spending and evidence that inflation rate is picking up before Fed raises rates. In addition, the Atlanta Fed chairman, Dennis Lockhart said that the U.S. economy is barely growing but is expected to keep advancing fast enough to prompt FOMC to think seriously of monetary tightening next week. It should be mentioned that after the weak August economic releases and comments from policymakers, market participants doubt a rate hike in September. It should be noted that Monday was the last day the FOMC members were allowed to speak before the “black-out period” begins. The policymakers are not allowed to give public speeches the week before the FOMC meeting.

Markets have been choppy this week following the slow job growth in August and ahead of a possible interest rate hike by the Fed on September 21. The Standard & Poor's 500 closed down more than 2% on Friday, the first time in 43 trading days that the U.S. index closed with a gain or loss of more than 1%. For the month, the index is down 5.5% while managing to maintain its year-to-date YTD gains of 5.60%. The S&P500 index surged more than 10% the last year while adding to its value more than 25% over the last 3 years.

The Dow Jones Industrial Average closed the previous week down 2.2%, with all 30 blue-chip companies finishing Friday’s session in red. The index fell nearly 400 points on Friday, the worst day of the year if we exclude the Brexit day when the index fell just over 600 pips. Following six consecutive positive months where the index added more than 10%, the DJIA plunged 0.17% the previous month and is 0.41% down so far this month. It should be noted that the index is up 5.20% YTD and up 12% over the last year. The index gained more than 15% over the last 3 years.

The tech-heavy Nasdaq Composite Index technology index closed the previous month in gains, near 1%, however, following the sharp sell-off the last few days it could place under threat its long-term uptrend. The tech index traded positive for the YTD +4.08 and 8.50% over the last year.

 

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Average returns are the simple mathematical average of a series of returns generated over a period of time. The Nasdaq composite index returned 31% in 2009 and 28% in 2013 to investors while it gained more than 10% in 2010, 2012 and in 2014. In 2015, the Nasdaq composite index delivered 5% gains while it is up 4% so far this year, threating to snap five straight years of gains. On the other hand, the average return rate for the S&P 500 from 2009 to 2012 was near 40%, contrary with the Nasdaq composite which returned near 60% to investors. Of the returns for the years between 2009 and 2016, 2015 had the lowest with -1%; 2013 had the highest with 23%. While both of the U.S. indices (S&P500 and Nasdaq) were performing well over the last 5 years, the dollar index, despite the negative performance from 2009 to 2013, gained 8% in 2014 and 5% in 2015, the year that the S&P500 snapped a negative month and the Nasdaq index recorded a figure below 10% for the first time after the -2% drop in 2011. Therefore, the annual return in the dollar index is becoming more stable over the last few years.

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Dow Jones Industrial Average – Technical Outlook
The Dow Jones Industrial Average index edged sharply upwards during the last seven months and surged more than 10%. The index is moving in an uptrend since January 2016 and is still holding. Over August the price climbed to the 18668 resistance level which is an all-time high following the pullback from the 15459 support level.

From a technical point of view, looking at the weekly timeframe, last week the index had an aggressive sell-off and plummeted more than 2%. In previous weeks, the price was consolidating and trading within a trading range, moving down to support at 18291 and up to the fresh highs at 18668. Currently, the index is moving near the 18200 price level and on Monday rebounded on the 200-daily SMA and gave back almost all of its Friday gains as it found resistance at the 50-daily SMA. In addition, a further upside potential move will take place if there is a break above the significant resistance zone at 18240 – 18291 where the price will challenge the 18553 barrier. An alternative scenario will be if there is a penetration of the ascending trend line which will open the door 17708 support barrier. The momentum indicators have turned slightly lower while the RSI indicator is sloping downwards after it bounced off the 30 level.

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S&P500 – Technical Outlook
The S&P 500 index advanced to an all-time high in August and reached the 2193 price level. From March to July, the index following the rebound on 1807, which is near the 200-SMA on the 4-hour chart, surged more than 12%. The index is ascending since last February and during this week tried to retest it.

The technical structure remains bullish to neutral, with the pair meeting some short-term selling interest around the key resistance zone at 2148 – 2154. The price failed to surpass the latter zone and is moving towards the 100-daily SMA. A successful break above the aforementioned obstacle will open the way for the new high at 2193 resistance level but the price needs to go through the 50-daily SMA. On the other hand, a downward move is possible if there is a penetration of the 2107 support level which overlaps with the rising trend line. Technical indicators are endorsing the thought for a small downward correction after the strong pullback on Monday. The MACD oscillator lies below both, the zero and trigger lines, while the RSI is near the 50 level and sloping to the downside.

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Nasdaq Composite Index – Technical Outlook
The Nasdaq index surged more than 7% the last three months and challenged a new high at 4837 resistance level. Over the last seven months the index has been moving in an uptrend within an ascending channel and now the price is moving below the key resistance area 4771 – 4780. During yesterday’s session, the index rose 1.6% and gave back almost all the gains from Friday’s sell-off. Additionally, the price had a pullback on the 50-daily SMA and is now moving near the 4738 price level. A break above the referred area will open the way for the 4837 barrier. On the other hand, the price may continue its downward move until the 4625 support level which is near the 100-daily SMA. From a technical point of view, the technical indicators on the daily chart are in negative territory. The RSI indicator bounced off the 50 level and is currently moving below it. The MACD oscillator has just entered into the negative territory and is moving below its trigger line.

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