Dow Jones Industrial Average (DJIA) (NEUTRAL)

• During a shortened holiday trading week, the stock market rally remained strong, with DJIA recording a 1.3% gain, while the S&P 500 and Nasdaq composite saw advances of 1% and 0.9%, respectively. In November, these indices have collectively surged by 7% to 11% and overcome significant resistance levels. Notably, the VIX, a measure of market volatility, declined sharply to 12.45 (-10% WoW). This marks the fifth consecutive weekly drop and brings the VIX to its lowest level since January 2020, indicating a robust and stable market rally.

• Looking ahead, as investors continue to expect that global interest rates might start to fall, the market is eagerly awaiting Thursday's release of the US personal consumption expenditures (PCE) price index, which is the Fed's preferred measure of inflation. This data will be examined for any signs that could strengthen the case for the Fed to halt its rate hikes. Additionally, the rescheduled OPEC+ meeting on Thursday is expected to continue to draw traders' attention, with discussions likely focus on production cuts for 2024.

• Technically, the DJIA's weekly chart shows a sustained upward trend, supported by the Stochastic Oscillator and MCDX's banker chip trending upward. We anticipate the current bullish momentum to persist this week while waiting for further insights from the US PCE data release. Any potential pullback is expected to be limited in severity and duration, unless leading economic data or expectations of an interest rate cut suggests otherwise.

• The key resistance levels to watch are at 35,679, followed by 36,952. On the flip side, significant support could emerge at 34,293, aligning with its 5-week SMA, or at the 34,033 level, which coincides with its 38.2% Fibonacci retracement level.

Source: Kenanga Research - 27 Nov 2023