Monday, October 25, 2010

Daily DJIA Reviews, 22/10/2010

Dow Jones closed 14 points lower to 11,133 level as worry about the weekend meeting of global finance officials kept pressure on the index. The market is watching whether officials, in preparation for a G-20 summit in Seoul next month, can agree on managing exchange rates to cool what's been called a "currency war."

So far, nearly three-quarters of the S&P 500 companies that have reported 3Q2010 results have topped analysts' estimates, but traders remain concerned about currencies and the mixed economic backdrop. Wow, the Dow rose 0.6% for a 3rd straight week of gains as encouraging earnings helped the market sustain upward momentum, coupled with expectations of Quatitative Easing 2(QE2) by Fed.

Over the weekend, the G-20 ministers (a precursor to a larger G-20 summit meeting in Seoul on 11-12 Nov), agreed that they would "move towards more market determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies." Although tensions of trade war will be reduced in the short term, the immediate direction of markets will likely be driven by next week’s FOMC meeting as Bernanake signals it may buy more assets.

For Wall Street, it could see wild swings in the market this week as investors will face a blizzard of earnings and economic reports (please refer to major US economy and corporate earnings table), approaching midterm elections and this week's triple-whammy. Dow’s immediate resistance levels are situated around 11300-11500 while immediate support levels are 10600-10800.

Daily DJIA shows immediate resistance situated at around 11,300 to 11,500 levels.

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