2023/05/03 (222.085) Technical Analysis

DOW Future

Fed Delivers 25bps Rate Hike, That´s Why US WallStreet Rises After Fed Decision

The Federal Reserve raised the fed funds rate by 25bps to a range of 5%-5.25% during its May meeting, marking the 10th increase and bringing borrowing costs to their highest level since September 2007. The decision came in line with market expectations. The central bank also signaled that it may be done with a tightening cycle by taking out from the statement sentence pointing to the need for additional policy firming. Still, policymakers added that in determining the extent to which additional policy firming may be appropriate, they will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. Officials also noted that although the U.S. banking system is sound and resilient, tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation and the extent of these effects remains uncertain.

US stocks extended gains Wednesday afternoon after the Federal Reserve hiked rates by 25 bps as expected and signaled a potential pause in its 14-month tightening cycle. On the corporate front, Ford Motor and Starbucks exceeded market expectations for revenue and profit, while Estée Lauder’s earnings exceeded forecasts but fell short on revenue. Shares of the automobile manufacturer giant gained over 1%, but Starbucks and Estee Lauder dropped 5% and 15%, respectively. Meanwhile, the latest ADP data showed that private payroll job growth in April surpassed expectations, indicating that the labor market remains tight. The ISM report showed that the US services sector expanded last month.

The Last Bullish GAP From August 2022 Must Be Defended By Us Bulls,
Because A Price Action Below Manifests A Failed Breakout Attempt In Retrospect

At this point, us inflation was at its peak. Which of course we didn’t know at the time. And why the Dow Jones Industrial Average Index, after the high of the breakout at 34281.36 points on 08th August 2023, fall back until on October 13th 2022, and traded new lows at 28660.94 points.

In November 2022, the Dow Jones Industrial Average Index was then traded above the GAPS again for the first time.33130.63 (daily low of 08/10/2022) and/or 32877.53 (daily high of 08/09/2022) – more precisely on 10/11/2022. And while this GAP was defended in December 2022, January 2023 and/or February 2023, investors and/or traders traded the Dow Jones Industrial Average Index below it again for the first time in March 2023. So, from a technical analysis point of view, a short-term technical reversal pattern formed. And that´s why I formulated even this long Technical Analysis 4XSetUp for the DOW JONES Future, by the way I even formulated it. Because the fight of the bulls and/or bears for the price action between 33130.63 points & 32877.53 is something like a front line for me. Because the short-term bullish trend reversal formation, below the GAPS, from March 2023 is opposed by a medium-term bearish trend reversal formation, just since November 2022. This is the technical picture that I currently perceive in the Dow Jones Industrial Average Index. And that’s why I pay attention to the lower price action brands around 32948.93 points, 32812.33 points, 32573.43 points and or also 32500.73 points. Which are below the GAPS. In retrospect, however, it was something like low prices, what you can see in the daily charts, with the help of the pivot points. These brands must be defended. At which level we more or less entered our long 4XSetUp in the DOW JONES Future.

This Is The Medium-Term And/Or Short-Term Basic Technical Scenario, If I Am Not Mistaken
– Regardless Of This Technical Analysis, Let’s Get A Quick Detail Overview At Today’s Price Action On The WallStreet

The US stock exchanges reacted to another rate hike by the US Federal Reserve with price losses on Wednesday. The Dow Jones Industrial lost 0.80 percent to 33,414.24 points. With three consecutive days of losses, May has so far proved to be the seasonally weak stock market month it is known as. As widely expected, the Fed raised interest rates by a further 0.25 percentage points. This is now in a range of 5.0 to 5.25 percent. Just over a year ago it was still on the zero line. The Fed has not made any specific commitments regarding its future monetary policy. The currency watchdogs deleted a passage from their statement on Wednesday’s interest rate decision, according to which further increases are to be expected. At the same time, however, additional interest rate hikes were not ruled out. The market-wide S&P 500 fell by 0.70 percent to 4090.75 points. The tech-heavy Nasdaq 100 closed 0.64 percent lower at 13,030.21 points. “Overall, it seems as if the US Federal Reserve is now in wait,” commented economist Christian Scherrmann from asset manager DWS. Depending on the data, the Fed could slightly adjust monetary policy up or down. In view of the latest mixed data on inflation and the labor market, the expert sees slight upside risks for interest rates. However, the situation could change quickly.

To Get A Better Feel For The US WallStreet And Not Just Via Our Long 4XSetUp In The DOW Future,
You Know That I Always Take Into Account The Price Action Of The US Dollar And/Or Also US 10Year Yield

DXY Approaches 1-Year Low After Fed
The dollar index fell to the 101.4 mark on Wednesday, approaching the one-year low of 101 touched on April 20th after the Federal Reserve delivered a 25bps hike n its funds rate, as widely expected, and omitted prior language that pointed to further tightening. The decision solidified previous bets that this rate increase would conclude the central bank’s 500bps tightening cycle, lower than earlier pledges of an even higher terminal rate as the FOMC balanced soaring inflation against a softening job market and major bank closures. Earlier in the week, the JOLTS showed that US job openings fell for a third straight month and layoffs increased to the highest in more than two years, suggesting employers are becoming more cautious amid heightened economic uncertainties. Investors also fretted about the collapse of First Republic Bank and its subsequent takeover by JPMorgan, the second-largest bank failure in US history.

US 10-Year Bond Yields Retreats Further
The yield on the US 10-year Treasury note fell back to under the 3.4% level, firmly below the one-month high of 3.6% touched on April 19th after the Federal Reserve hiked rates by 25 bps as expected and signaled a potential pause in its 14-month tightening cycle. “The committee will closely monitor incoming information and assess the implications for monetary policy,” the Federal Open Market Committee said in a statement Wednesday. It omitted a line from its previous statement in March that said the committee “anticipates that some additional policy firming may be appropriate.”

US Stocks Close Lower After Fed Decision
The Dow ended 270 points lower on Wednesday, while the S&P 500 and Nasdaq 100 fell nearly 0.7% and 0.5%, respectively, as investors weighed comments from Fed Chair Powell at the press conference that signaled no rate cut is on the table if inflation remains high. Earlier, Wall Street enjoyed some respite on growing expectations the central bank will pause interest rate hikes, following today’s expected 25 bps increase. Adding to Fed concerns, the latest ADP data showed that private payroll job growth in April surpassed expectations, indicating that the labor market remains tight. Also, the ISM report showed that the US services sector expanded for the 4th consecutive month.

Whatever The Price Action In The US Was Today, There Were Also Some Fresh US Economic Data
That I Don’t Want To Withhold From You At This Point, So That We Can Get A More Detail Overview About The US Economy

Mortgage Applications Fall 1.2%: MBA
Mortgage applications in the US fell 1.2% in the week ended April 28th 2023, following a 3.7% rise in the previous week, data from the Mortgage Bankers Association data showed. The purchase index went down 2% while applications to refinance a home loan edged 0.8% higher. Compared to a year earlier, demand to purchase a home was 32% lower, and demand to refinance was 51% lower.

US Private Employment Rises More Than Expected
Private businesses in the US created 296K jobs in April of 2023, well above a downwardly revised 142K in March and beating forecasts of 148K. It is the strongest employment gain since July of 2022, with pay gains slowing rapidly and fewer people switching jobs.US Services Activity Grows For 4th Month
The ISM Services PMI increased to 51.9 in April of 2023 from 51.2 in March, and slightly higher than market expectations of 51.8. It marks a fourth consecutive month of growth in the services sector, prompted by a faster increase in new orders (56.1 vs 52.2), a rebound in new export orders (60.9 vs 43.7) and one of the fastest supplier delivery performance since December 2015 (48.6 vs 45.8) due to ongoing improvements in both capacity and supply logistics.

US Output Growth Accelerates To 11-Month High
The S&P Global US Composite PMI came in at 53.4 in April 2023, little-changed from the estimate of 53.5 and showing a solid upturn in private sector business activity that was the fastest since May 2022. The faster increase in activity was due to both the manufacturing and service sectors experiencing quicker growth.

US Services PMI Revised Slightly Down But Remains Strongest In A Year
The S&P Global US Services PMI was revised slightly down to 53.6 in April of 2023 from a preliminary of 53.7, but continued to point to the biggest expansion in the services sector in a year, as output, new orders and employment growth all accelerated. The rate of expansion in new orders was the sharpest for almost a year, prompted by greater customer referrals, stronger demand conditions in the domestic market and successful marketing and sales initiatives.

Anyway, Let’s Define A Few More Technical Price Marks That Might Be Important
In The Coming Days, Based On Today’s Price Action Intraday Development On This Trading Day

33414.0 points was the closed today. On the 30 min. intraday candelstick chart we have to realize and accept that the bears are still taking over the price action averagly about the last 5 trading days and/or last 20 trading days. Because the 65 SMA and/or 260 SMA is actuallity above at 33817.05 and/or 33744.20 points.