Dow Jones Index Tanks As Consumer Spending Remains Strong
Dow Jones (INDEXDJX: DJI) Index got rejected from the key resistance level of 35629 points at the start of this month. The index contains the stock price of 30 of the most traded companies on the US stock exchange. On Tuesday, the index extended its losses and closed below the key psychological level of 35,000 points.
On 10th August, the candle for Dow Jones Industrial Average remained red throughout the trading session. The negative sentiment follows a failure to break above the key resistance level of 35,629 points. The index closed at 34,946 points on Tuesday after the announcement of improved retail sales in the US.
US Stocks Slide Amid Positive Retail Sales
On Tuesday, the US Census Bureau reported a 0.7% increase in its retail sales, beating the expectations of 0.4% by a landslide. This is worrying news for investors as this paves the way for yet another increase in interest rates in the next FOMC meeting. This also explains today’s selloff in the US equities, which took Dow Jones Index to its fresh monthly lows.
Earlier in the day, China released poor retail sales performance, which also contributed to bearish sentiment in the US. The central bank of China tried to counter the weak report by increasing the interest rate by another 15bps to 2.5%.
Dow Jones Index Rejected From Key Resistance Level
As I forecasted in my previous analysis, the DJI got failed to break its 35,629 points resistance. The bulls tried to break above the key level multiple times but to no avail. The positive retail data helped the bears to the lowest level since July 18.
For the index to see new highs, bulls must display some strength and take the price above the key resistance level of 35,629 points. Currently, the index is down 1.90% from the key resistance level. The broader market sentiment will play a key role in this regard.
I’ll keep posting my updated DJI analysis and my personal trade setups on Twitter, where you are welcome to follow me.