Dow Jones Industrial Average dropped 221.36 points on trade angst

 

• Nasdaq Composite lost 60.04 points, or 0.79%, to finish at 7547.31.
• The S&P 500 fell 19.37 points, or 0.69%, to close at 2783.02.
• The Dow Jones Industrial Average dropped 221.36 points, or 0.87%, to close at 25126.41.

The DJIA was on the back foot as China appears to be prepared to fight back in what is now looking to be a complete stalemate in the trade standoff between Bejing and Washington which holds little prospects of resolve for the foreseeable future. Chinese media reports that China will retaliate by weaponizing so-called rare earth metals.  The Dow Jones Industrial Average dropped 221.36 points, or 0.87%, to close at 25126.41. The S&P 500 fell 19.37 points, or 0.69%, to close at 2783.02. And the Nasdaq Composite lost 60.04 points, or 0.79%, to finish at 7547.31.

Global data continues to disappoint

Analysts at ANZ Bank explained that the Richmond Fed manufacturing index rose less than expected in May, ticking up from 3 to 5, versus 7 expected. "The release follows a sharp weakening in the Dallas Fed manufacturing index yesterday and very soft manufacturing data out of the US so far this year."

Also, the analysts explained that the German labour market took a hit: "The German unemployment rate unexpectedly rose for the first time since 2013 as the slowdown in the economy shows some signs of filtering through to the labour market. The unemployment rate lifted to 5.0% in May (4.9% expected), and the number jobless rose 60,000, compared to an 8,000 decline expected. The statistics agency attributed a large part of the rise to a reclassification of some people in the statistics, but the growth slowdown also contributed."

DJIA levels

On the upside, the 23.6% retracement of the recent swing highs and lows is located at 25196, just below the session highs and 11th march major swing lows, and is guarding a run to the 38.20% Fibo at 25352. 25432 is where the 200 D EMA is located. Then, the 200 4HR EMA has a confluence with the 61.8% Fibo of the same range at 25603.

While below the 26000 psychological target, (50% Fibo of May swing high low range), short term stochastics had corrected higher giving more room for the bears to capitalise upon. The index indeed broke below the 25200s and buried further below the 200 D EMA, the bears can now target a run towards  the24500s and then 50% of the upside run made at the end of Dec at 24150.