Thursday, October 21, 2010

Daily DJIA Reviews, 21/10/2010

Dow Jones rose as much as 106 points to 11214 (52-wk high:11258) on commendable China’s 3Q2010 GDP numbers and better-than-expected earnings from McDonald, UPS, Caterpillar, Nokia and Travelers. However, the momentum fizzled out amid weakness in banks and strengthening US dollar that pushed the index off high to close only +38 points.

Bank of America Corp, facing demands for refunds from mortgage-bond holders, tumbled 3.3 percent to a 16-month low whilst a government report said Fannie Mae and Freddie Mac, the mortgage-finance companies under U.S. conservatorship, may need as much as US$363 billion in aid through 2013. There is also speculation that the QE2 will be smaller-than-expected as the U.S. Treasury Secretary Timothy Geithner said on Thursday that the Fed's action won't be as large as expected, sending the dollar higher and taking steam out of the stock market's early rally.

After the bell, American Express and Amazon reported earnings that topped estimates.

The general upbeat mood on the ongoing reporting season is likely to provide a good catalyst to surpass 52-week high of 11258 points. However, we expect more volatility ahead of the Nov 3 FOMC meeting as there is renewed concern that QE2 will fall short of market expectation and lingering concern about banks’ mortgage crisis remain. Dow Jones’s immediate resistance are situated around 11200-11300 levels while immediate support are 10600-10800 around levels.

Daily Dow Jones is trying to retest 52-week high of 11258 level.
Source: MarketWatch

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