Stock Indices: Dow Jones falls a second day ahead of US macroeconomic data

On Thursday Dow Jones Industrial Average traded within the range of 17,443.50-17,691.93. The benchmark closed at 17,448.07, shedding 1.44% (254.28 points) on a daily basis, while extending the loss from Wednesday. The daily rate of decrease has been the steepest one since September 28th, when the blue-chip benchmark slumped 1.92%. The daily low has been the lowest level since October 22nd, when the average went as low as 17,180.88. In weekly terms, DJIA advanced 1.40% last week, while marking its sixth consecutive week of gains. For the current month, however, Dow is down 1.22%.

Among the companies included in the benchmark, 28 posted a daily decline on Thursday and 2 posted a daily gain. Shares of Caterpillar Inc (CAT) plummeted the most yesterday, going down 4.52% to close at USD 68.66, while extending losses from Wednesday. The daily rate of decrease has been the steepest one since September 24th, when Caterpillar lost 6.27%. November 12th low of USD 68.41 has been the lowest price level since October 27th, when a low of USD 68.34 per share was registered, while the daily volume has been the highest since October 22nd.

At the same time, the shares of United Technologies Corporation (UTX) registered the most notable daily increase within the DJIA, going up 0.98%, to close at USD 99.22, following three consecutive trading days of losses. The daily gain rate has been the sharpest one since November 2nd, when United Technologies added 1.00%.

On a weekly basis, 2 shares posted gains, 27 posted a slump and 1 showed no change during the week ended on November 8th.

On Friday Dow Jones may be highly influenced by an array of key macro data coming out from the United States. Retail sales in the United States probably rose 0.3% in October on a monthly basis, according to the median forecast by experts. In September sales were up another 0.1%, while the August performance was revised down to flat from a 0.2% gain previously. US core retail sales, or retail sales ex autos, probably went up 0.4% in October compared to a month ago, following a 0.3% drop in September. If so, October’s rate of increase would be the fastest one since July. The official report by the US Census Bureau is due out at 13:30 GMT.

In addition, annual producer prices in the United States probably fell for a ninth month in a row in October, by 1.2%, according to the median estimate by experts. If so, it would be the sharpest annual drop since April, when producer prices slumped 1.3%. In September the annualized Producer Price Index decreased 1.1%. The nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably decelerated to 0.5% in October from 0.8% in the prior month. If so, this would be the lowest annual surge in the core PPI in more than eight years. The Bureau of Labor Statistics is expected to report on the official PPI performance at 13:30 GMT.

Last but not least, the monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved for a second straight month in November. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably rose to 91.5 during the current month from a final reading of 90.0 in October. If so, November would mark the highest level of confidence since August, when the gauge was reported at a final 91.9.

Correlation with other indices

Taking into consideration the daily closing levels of the major stock indices examined and the period November 2nd-November 6th, we come to the following conclusions in regard to the strength of relationship:

DJIA to Euro Stoxx 50 (0.6246, or strong)
DJIA to CAC 40 (0.4221, or moderate)
DJIA to DAX (0.3805, or moderate)
DJIA to KOSPI (0.3312, or moderate)
DJIA to Hang Seng (0.1730, or weak)
DJIA to S&P/TSX 60 (0.0937, or very weak)
DJIA to FTSE 100 (0.0185, or very weak)
DJIA to Nikkei 225 (-0.2323, or weak)
DJIA to Bovespa (-0.3386, or moderate)
DJIA to RTSI (-0.9542, or very strong)

During the past week, Dow Jones Industrial Average tended to have moved strongly in one and the same direction with Euro Stoxx 50, while moving almost equally in the opposite direction compared to the Russian RTSI.

Additionally, DJIA tended to have moved to a moderate extent in one and the same direction with 3 major indices during the period, while moving to a moderate extent in the opposite direction compared to the Brazilian Bovespa.

DJIA tended to have shown an insignificant correlation with the Japanese Nikkei 225 and Hong Kongs Hang Seng during the past week.

Dow tended to have moved almost independently compared to the Canadian S&P/TSX 60 and United Kingdoms FTSE 100 during the period in question.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the Friday pivot levels for DJIA are presented as follows:

R1 – 17,470.84
R2 – 17,493.62
R3 (range resistance) – 17,516.39
R4 (range breakout) – 17,584.71

S1 – 17,425.30
S2 – 17,402.52
S3 (range support) – 17,379.75
S4 (range breakout) – 17,311.43

By using the traditional method of calculation, the weekly pivot levels for DJIA are presented as follows:

Central Pivot Point – 17,851.07
R1 – 18,037.11
R2 – 18,163.90
R3 – 18,349.94

S1 – 17,724.28
S2 – 17,538.24
S3 – 17,411.45