First half struggles to keep Dow weekly technical data lower

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There was a lot of data to digest at the end of last week, and the central bank’s hawkish policy and response to inflation meant that financial market participants were hoping for some slowing in prices. Thursday’s US PCE (Personal Consumption Expenditures) price index showed 6.3% y/y overall and its core 4.7%, m/m 0.6% and 0.3%. Other economic data included

  1. Personal expenses and income for the month of May, the former clearly missing at only 0.2% and the latter at 0.5% and therefore down in real terms,
  2. Declining construction expenditure,
  3. The ISM (Institute for Supply Management) Purchasing Managers Index (PMI) deteriorated to a smaller reading of 53, where employment and new orders were in sub-50 territory and a decline well than always expansionary in prices paid.

The results put the Atlanta Fed’s GDPNow estimate for the second quarter at -2.1%, which would imply a recession given the contraction in the first quarter. The speed at which it has changed for this quarter shows how sensitively and quickly the narrative can change. It also meant that Treasury yields were set to fall for the week and were most noticeable at the other end of the curve, leading to lower real yields, widening corporate spreads and a sharp drop in expectations for equilibrium inflation. Market prices for Fed hikes are still a 75 basis point majority when they meet later this month, a 50 basis point majority for September, 25 thereafter for a few meetings where it then peaks.

Looking ahead to the week ahead, a holiday today in the United States will keep stock and bond markets closed, with trading expected to be light. Next key is Wednesday’s Federal Reserve (Fed) minutes and services PMIs for the most part will be offered tomorrow after what was largely a disappointment in preliminary readings, for the United States pushed back to Wednesday for the ISM and the S&P. U.S. oil, gas and distillate inventory readings out of the API and EIA will also be a day later this week, and once that’s settled, the focus will be on employment with job openings on Wednesday which are expected to remain elevated, the usual Thursday jobless claims preceded by ADP’s non-farm estimate, ahead of the impact on the non-farm payrolls market on Friday alongside a series other items from the BLS (Bureau of Labor Statistics). Expectations are for a smaller reading of 270K, with wage growth of 0.3% and the unemployment rate unchanged at 3.6%. Consumer credit is a noteworthy item when it comes to consumerism, as large m/m readings mean that the sustainability of purchases will be in question as prices stay high for longer.

Dow Technical Analysis, Overview, Strategies and Levels

There may have been a few offered for conformist sell strategies on the intra-week move past its previous weekly support level, but there were more for contrarian buy strategies. running. From a daily time frame perspective, last Thursday’s moves gave conformist daily sell breakouts the edge over a move beyond the S/L (stop loss) of its previous daily support level.
From a technical point of view, there was no change for the weekly or daily time frame, a “bear” although calling it a stagnant trend or an average a somewhat thin line given the width of the last downtrend channel .

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