Friday, August 5, 2011

Daily Dow Jones: Crucial Support Of 10860 (61.8%FR), 05-08-2011

Wall Street Recap: Dow Jones plummets 4.3% or 513 points amid recessions fears
Dow Jones nosedived 4.3% as investors compiled a lengthy list of concerns about the U.S. and global economy. Oil tumbled 5.7% to US$87/barrel while 10-year Treasury yields tumbled 0.22% to 2.4% as investors sought safety in government bonds. To recap, Dow Jones plunged 1341 points or 10.5% in the last 10 sessions and already corrected 11.5% from 52-wk high of 12923.

The rout was driven by intensifying fears that the U.S. economy could slip back into recession amid recent sluggish economic numbers and ahead of the widely-followed monthly unemployment report tonight. Sentiment was further dampened by ECB President Jean-Claude Trichet saying "downside risks of Europe economy may have intensified", concerns that the Fed will not try to boost the economy again and the prospects of little help on the way from the federal government.

Wall Street outlook: Dow Jones: All eyes on nonfarm payroll data
As we had alerted in our earlier reports, the technical outlook of Dow Jones has turned bearish following the breakdown of the Head & Shoulder, 200-d SMA (11987) and uptrend line (12100) supports. The overnight plunge has worsen the technical readings further.

Immediate support is the 11000 psychological mark. If the crucial job report tonight is below consensus, Dow may test 10860 (61.8% FR) before a meaningful rebound is in the cards amid extremely oversold positions.

Relief rally targets are 11500-12000 levels.

Daily Dow Jones: Crucial Support Of 10860 (61.8%FR)


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