- A consolidation theme has emerged for the major US (and in fact European) equity averages over the past 1-2 weeks, with no significantly new bad news emerging from the ailing US-Sino trade negotiations.
- This has allowed equity markets to rebound and ease bear forces from the aggressive selloffs seen in the first half of May.
- In the very near term, we see a further recovery bias, but on an intermediate-term basis, the threat remains into the summer for deeper corrections lower.
- In this report we spotlight the blue-chip benchmark index, the Dow Jones Industrial Average.
DJIA threat just remains higher
A sideways consolidation Wednesday and a small dip lower this morning, after Tuesday’s bounce rejected Monday’s setback, BUT still above notable 25554 support, to just hold onto upside forces from the strong mid-May recovery from 25215/213 supports, to keep risks higher for Thursday.
The early May push below key 26060 support set an intermediate-term range we now see as 26694 to 25215/213.
- We see an upside bias for 25779; break here aims for 25904, then 25955, maybe even 26079.
- But below 25554 quickly opens risk down to 25500, maybe 25326.
Intermediate-term Range Breakout Parameters: Range seen as 26694 to 25215/213.
- Upside Risks: Above 26694 sets a bull trend to aim for 26966, 27000 and 27250.
- Downside Risks: Below 25215/213 sees a bear trend to target 25000, 24284 and 23640.