Dow Jones Industrial Average (DJIA)

• U.S. stock indexes retreated 1%-3% last week after post-election highs, as inflation edged up with October's CPI reaching 2.6%, slightly above September's 2.4%, complicating the Fed's 2% target. In response, Fed Chair Jerome Powell hinted at a potential slowdown in rate cuts, suggesting they might hold off in December. Meanwhile, unemployment claims fell to a six- month low. Bitcoin also set a record high for the second consecutive week, closing at USD91,000 (+12.7% WoW), fuelled by Trump's pro-crypto stance.
• Looking ahead, cautious trading is expected to persist this week, influenced by recent Fed Chair Jerome Powell's comments on a potential slowdown in rate cuts, which could continue dampen earlier expectations of aggressive monetary easing. Besides, investors are closely watching NVIDA's 3Q earnings report on Wednesday, with forecasts of USD0.74 EPS and USD33.2b in revenue, representing an 83% YoY increase. Additionally, attention is also on President Trump's cabinet appointments, which could drive sector-specific impacts and accelerate a rotation from Technology to cyclical sectors like Financials, Industrials, and Energy, amid anticipated economic and policy shifts.
• Technically, despite the benchmarked index declining 1.2% last week, it still remains in an uptrend, staying well above key SMAs (13, 50, and 200-week). However, divergences in stochastic and RSI indicators suggest potential near-term consolidation or a pullback.
• In short, we anticipate cautious trading with a downside bias this week, particularly in the first half of the week. However, better-than-expected guidance from NVIDIA could boost sentiment later. Key support levels are at 43,099 and 42,631 (aligned with the 5-week SMA), while resistance levels are at the psychological 44,000 and 44,486.

Source: Kenanga Research - 18 Nov 2024