Weekly view: Higher market volatility with downside bias
Dow Jones Industrial Average (DJIA)
U.S. stocks posted weekly gains of 2% to 4%, driven by Wednesday and Friday rallies. The DJIA, now less than 3% below its December 4 record high, logged just its second positive week in six weeks. Bond yields retreated, with the 10-year Treasury yield closing at 4.61%, down from 4.77% last week. Strong results from major U.S. banks surpassed expectations, with 4QCY24 earnings more than doubling year-over-year. S&P 500 financial sector earnings were forecast to grow nearly 40%, the strongest among all sectors, according to FactSet. The CPI report showed core inflation rising 3.2% annually in December, slightly below expectations, boosting market sentiment. Meanwhile, China's economy grew 5.4% in the 4QCY24, exceeding estimates, with full-year growth aligning with its 5.0% target.
Looking ahead, with a light economic calendar, market attention is expected to focus on 4Q earnings reports and potential policy announcements, including tariffs, which could impact bond yields and investor sentiment. Reports suggest President- elect Donald Trump is preparing to sign over 100 executive orders starting on his first day in office. Despite these uncertainties, the post-election rally - driven by expectations of corporate-friendly policies such as tax cuts, deregulation, and pro-growth initiatives - continues to underpin market optimism. A ceasefire deal between Israel and Hamas in the Gaza Strip took effect on Sunday after a nearly three-hour delay also likely to impact sentiment.
Technically, The DJIA has rebounded from its 13-week SMA, closing decisively above its 5-week SMA, suggesting that the short-term uptrend remains intact. Weekly stochastic and RSI indicators point to further recovery, but caution is warranted as the SmartMCDX index nears the 15 threshold, historically associated with sell-offs.
In short, market volatility is expected to remain elevated in this shortened trading week, with downside bias, driven by Trump's potential policy announcements. Key support levels are at 42,350 (13-week SMA) and 41,211 (23.6% Fibonacci retracement), while resistance levels are at 43,537 and 45,073.
New IPO: ES Sunlogy Berhad, a provider of mechanical and electrical (M&E) engineering services and renewable energy solutions, aims to list on the ACE Market!
MQ Trader 1285 views | 9 d ago
0:17
New IPO: Techstore Berhad, an IT security and automation solutions provider, aims to list on the ACE Market!
MQ Trader 1038 views | 11 d ago
0:17
New IPO: Richtech Digital Berhad, a distributor of electronic reloads and digital payment solutions, aims to list on the ACE Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....