Dow Jones Industrial Average (DJIA)

• U.S. stock indexes climbed around 2% for the week, with the Dow hitting a record high, the S&P 500 just 0.5% below its peak, and the NASDAQ 1.5% off its all-time high. The rally came despite Nvidia's modest guidance beat which failed to boost the stock, and semiconductors falling ~1% amidst concerns over tighter China export restrictions. Gains in Financials, Energy, Industrials, and Consumer Discretionary, coupled with optimism over upcoming policy changes lifted market sentiment. Notably, Bitcoin surged to a record high for the third week, nearing $100,000 (+9.4% WoW) on Trump's pro-crypto stance, while oil prices rebounded 6% to $71 per barrel due to rising geopolitical tensions.
• Looking ahead, the benchmark index is expected to continue its upward trend during the historically bullish Thanksgiving week, though the holiday-shortened trading week with lighter volume may increase volatility. Investors will focus on Wednesday's PCE inflation report, with core PCE price index expected to rise 0.3%, matching September's increase. U.S. consumer spending also comes into focus as Black Friday kicks off the holiday season, revealing how buyers are grappling with higher prices despite easing inflation. Nevertheless, geopolitical risks from the escalating Russia-Ukraine conflict could remain a concern for potential global supply chain disruptions, driving market volatility.
• Technically, the benchmark index remains in an uptrend, holding firmly above its key SMAs (5, 13, 50, and 200-week), signalling bullish momentum. However, divergences in stochastic and RSI indicators suggest potential near-term consolidation as the index nears higher resistance levels.
• In short, we expect optimism to persist during the shortened holiday week, but a hotter-than-expected PCE report could temper sentiment by raising concerns about slower rate cuts. Key support levels are at 42,960 (5-week SMA) and 41,501 (13- week SMA), with resistance at 44,486 and the psychological 45,000 level.

Source: Kenanga Research - 25 Nov 2024