Dow Jones Industrial Average (DJIA) (Upward Bias)

• The S&P 500 and NASDAQ saw significant weekly gains, breaking a three-week decline, fuelled by strong tech sectorearnings. This surge helped mitigate the impact of disappointing economic and inflation data. The NASDAQ jumped over 4%,and the S&P 500 increased nearly 3%, while the Dow posted only a slight gain of 0.7%. With the earnings season at itsmidpoint, FactSet updated its earnings growth forecast for S&P 500 companies from 0.5% to 3.5% for the 1QCY24, reflectingimproved expectations based on recent reports and forecasts for companies yet to report.

• This week may show mixed market movements with a slight upward bias. All three major indices have recovered fromtechnically oversold conditions but remain below their 50-day SMA resistance levels. Additionally, their weekly charts suggestthat the 5-week SMA will be a critical resistance to watch, as it may determine whether the market continues its upward trendor shifts to a new downtrend. Key earnings from tech giants like SMCI, Amazon, AMD, Qualcomm, and Apple could influencemarket sentiment this week. Additionally, the Federal Reserve's meeting starting Wednesday and Friday's employment dataare also expected to add volatility to the mix.

• Technically, the DJIA has bounced off its 13-week SMA but still remains below its 5-week SMA last week. The lack of clearreversal signals in the weekly Stochastic and RSI indicators, as well as the flattish MCDX suggested that the index mightcontinue to move sideways, awaiting new market-driving catalysts.

• In short, we're anticipating choppy sideways trading with a slight upward bias this week. A decisive move above the 5-weekSMA at 38,503 could signal a continuation of the upward trend. Conversely, a fall below the critical 13-week SMA support at37,689 may indicate the start of a new downtrend.

Source: Kenanga Research - 29 Apr 2024