Sunday, October 3, 2010

Dow Jones Industrial Average Review, 01/10/2010

Daily Dow Jones shows that it is undergoing consolidation ahead of the 3Q reporting season.

The Dow was up as much as 79 points amid strong September PMI of 53.8 (August: 51.7) in China and a better-than-expected US personal income and spending in August coupled with expectations of more quantitative easing after Fed officials said more must be done to lift the weak economy. The US$ slipped to a 6 month low against Euro at 1.38, crude oil rose 2% to US$/82/barrel whilst gold surged to another record high for the 6 straight days at US$1316/ounce.

However, slower monthly growth in September ISM of 54.4 (Aug:56.3) and consumer sentiment index of 68.2 (Aug: 68.9) spurred profit taking activities ahead of some key economic data and earnings release this week, namely August factory orders (4 October), September ISM non-manufacturing index (5 October), September ADP report (6 October), 3Q 2010 Alcoa results (October 7) and September job data (October 8).

For Dow Jones, the strength of September’s momentum will be tested this week by several economic data as well as the start of third quarter earnings season. We expect Dow Jones to consolidate within a range bound 10500-11000 levels in the short term.

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