Dow Jones Industrial Average (DJIA) (NEUTRAL)

• Last week, major indexes rebounded sharply from multi-month lows, marking their best performance since early November 2022. The Dow Jones Industrial Average (DIJA) surged 5.1%, while the S&P 500 and Nasdaq rose by 5.85% and 6.6%, respectively. The rally, confirmed by follow-through days, was driven by falling Treasury yields, favourable rate decision, and comments from Fed Chief Jerome Powell.

• The robust rally propelled the DIJA to break out from several key weekly Simple Moving Averages (5, 13, and 50), indicating a continued bullish outlook. Investors are encouraged to judiciously engage with the market rally and explore recent opportunities. While some uncertainties have eased post-earnings season and rate decision, a brief pause could allow for consolidation and reveal new investment possibilities.

• A definitive breach above the immediate weekly resistance level of 34,600 could pave the way for the index to challenge the 35,680 mark. On the flip side, a decline below its 50-week SMA of 33,781 could steer the index toward retesting the critical psychological threshold of 33,000, aligning with the 38.2% Fibonacci retracement level.

• All in, while we anticipate a possible pullback, we are taking a cautiously optimistic view and believe every retreat to key support levels presents an opportunity to accumulate stocks.

Source: Kenanga Research - 6 Nov 2023