October 19, 2020

Chinese Economic Growth Boost Stock Futures

Chinese Economic Growth Boost Stock Futures

Stock Market Today

Investors are beginning the week with some optimism concerning the U.S. stimulus aid package, and a broader economic recovery in China is also boosting the sentiment.

The Chinese economic numbers, such as the third-quarter GDP, retail sales, industrial production, and several other indicators show that China, the instigator of the pandemic, is well and truly recovering its losses caused by Coronavirus.

As for the U.S., hopes are that we will get another stimulus package that will help the economic recovery. However, if we do not get this aid package on time, it is highly likely that we may see a lot more weakness for the economy and the stock market. Both factors, the economic recovery and a strong stock market are very important for President Trump as the U.S. presidential elections are less than two weeks away.

The Asian stock market closed higher on the first trading day of the week. The HSI index increased by 0.71%. The Korean Kospi index also moved higher by 0.85%, while the Nikkei index advanced 1.18%. The Australian ASX 200 gained 0.85%.

 Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth gained more strength on Friday. 73% of the Dow Jones stocks traded above their 200-day moving average.  This is a change of +3% from a day earlier.  

The S&P 500 stock breadth remained unchanged on Friday. 71% of the shares traded above their 200-day moving average. This is a change of 0% from a day earlier.  

Dow Jones Futures Today

The Dow Jones futures are trading higher by 173 points. Traders will be focusing on Fed Chairman, Jerome Powell’s speech today. Investors will be looking for more clues concerning the Fed’s monetary policy.

On Friday, the U.S. Retail Sales data came out much stronger than the market expected; this raised hopes that the economic recovery isn’t going off the rails yet. The question is how the Fed Chairman sees this development. 

The Dow Jones futures closed the week in negative territory on the weekly time frame; however, the price was able to make another higher high. The resistance level for the Dow Jones is at 29178, and as long as the price continues to trade above the 50, 100, and 200-day SMA on the daily time frame, the long term trend will remain intact. As for the intra-day time frame, such as the 4-hour time frame, it seems that the bulls are running out of steam, as the price has challenged the 50-day SMA once again. The immediate support is at 28092.

The S&P 500 index, which represents the wider stock market, shows that the price could be forming a double top on the daily time frame. The immediate resistance is at 3586, and the support is at 3400. Bulls are still in control of the price as the S&P 500 is still trading above the 50, 100, and 200-day SMA on the daily time frame. 

Stock Market Rally

The S&P 500 stock index was barely able to hold its gains on Friday, the index advanced by 0.01%. The utility sector led the index higher, and 7 sectors out of 11 closed higher. 

The Dow index closed in positive territory on Friday; the Dow stocks moved the index higher by 0.39%. 9 shares of the Dow fell, and 20 shares closed higher. 

The NASDAQ composite, a tech-savvy index, moved lower by 0.36% on Friday. 

S&P 500 Leaders and Laggards: GE and JB Hunt

GE stock contributed the biggest gain, soaring 6.11%. JB Hunt stock was the largest drag; it fell by 9.73%. The S&P 500 stock index is up 7.8% so far this year.

Dow Jones Leaders and Laggards: UnitedHealth and Goldman Sachs

UnitedHealth stock advance higher by 1.64% and was the biggest mover for the Dow, while Goldman Sachs stock declined 1.15%, the biggest drag for Dow Jones Industrial Average index.