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Christian KÄMMERERHead of German Speaking Markets
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Barbara NICODEMOUMarket Analyst
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Melina DELTASJunior Market Analyst

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%.

USsecotrs11012017

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. 

US30CashDaily110117.png

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.

US500CashDaily110117.png

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. 

USTECHCashDaily110117.png

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

2017 01 10 16 26 04 Stock100117 Excel

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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.

Monthlyperf121216m 2

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.

YTD121216m 2

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.

Fed12122016

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.

US30CashDaily121216

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.

US500CashDaily121216

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.

USTECHCashDaily121216

Wednesday, 19 October 2016 07:44

U.S. Indices Report: October

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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

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Wednesday, 05 October 2016 08:06

Stock Of The Month: DBK

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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. 

StockPrice05102016...

Tuesday, 13 September 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

...
Thursday, 01 September 2016 11:54

U.S. Stock Of The Month: AA

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Published in Stock Markets Insight

The aluminium company had some disappointing earnings reports in 2015, however, the last report published for Q2 raised optimism on the market and encouraged investors to create a positive bias on the stock. 

PerfAA010916

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Monday, 01 August 2016 13:12

U.S. Stock Of The Month: FB

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Published in Stock Markets Insight
Wednesday, 29 June 2016 10:45

U.S. Stock Of The Month: GS

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Published in Stock Markets Insight
Monday, 09 May 2016 13:38

U.S. Stock Pick of the Month

Published in Stock Markets Insight

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