Nasdaq
The Dow Jones is down 83 points and is now trading at 28,081 in today’s shortened trading session. Today’s drop is being attributed to trade tensions arising from the signing of the controversial “Hong Kong bill” into law by US President Donald Trump. The enactment of the new law, which has made Hong Kong’s protected trade status subject to an annual review of China’s human rights record in the territory, has angered the Chinese government. Beijing summoned the US envoy for a meeting and threatened a retaliatory response, putting the US-China trade agreement that is expected to be signed in December in the air.
Asian markets fell across board on the developments, and the Dow has followed suit, although losses have been limited by stellar performances of stocks like Alibaba on the day. The Dow is also expected to feel some heat as reports of empty retail outlets hit the newswires. Some retailers such as Walmart, Target and WorldMarket had begun their Black Friday sales a month earlier. Looming tariffs and waning enthusiasm is also being blamed for lacklustre sales in the US. Following last year’s example, online sales from Cyber Monday are expected to trump Black Friday sales and this is all coming together on the Dow.
Price is trading within a short-term ascending channel, with the lower border set to intersect the 28,080 price area. If the Dow is sold off to the extent of breaking down the channel, then the next support target at 27,353 comes into play. This is where previous highs of July 15-23 as well as September 15/16 are located. Further selling introduces 26,675 into the picture (highs of April 23 to May 1 and cluster of lows around September 25-27 and October 21-23).
If the Dow is able to shake off today’s losing session next week, it will target all-times highs with possibility of continuing the uptrend even further. However, the question always looms: when will the market correct after such a long uptrend? Perhaps, the rising wedge on the weekly chart may answer the question in due course.