Dow Jones Industrial Average (DJIA) (Bearish Bias)

• Last week, the Dow Jones Industrial Average (DJIA) made a recovery, rallying from a key support level identified by the 61.8% Fibonacci retracement on its daily chart. This positive momentum was driven by the Federal Reserve's dovish stance and solid economic data, which managed to mitigate the effects of geopolitical disruptions. While the DJIA aimed to surpass its 13-week Simple Moving Average (SMA) during the week, it couldn't sustain that level and closed at 33,670.30, reflecting a week-over-week gain of 0.79%.

• Looking ahead, the trajectory of the DJIA will be influenced by upcoming corporate earnings reports. The 3QCY23 earnings season is set to gain momentum this week, with 13% of S&P 500 companies scheduled to disclose their financial performance. The spotlight will initially be on major U.S. banking and financial entities, before transitioning to technology corporations.

• From a technical perspective, although the DJIA has exhibited a 'Morning Doji Star' pattern on its weekly chart, signalling preliminary indications of a potential trend reversal, the escalating geopolitical tension could restrain further gains.

• A definitive breach above the immediate weekly resistance level of 34,059 could pave the way for the index to challenge the 34,850 mark. On the flip side, a decline below last week's low of 33,253 could steer the index toward retesting the critical psychological threshold of 33,000, which aligns with the 61.8% Fibonacci retracement level.

• All in, although the weekly chart shows initial signs of a possible trend reversal, we are taking a bearish bias unless the immediate resistance level is surpassed.

Source: Kenanga Research - 16 Oct 2023