Dow Jones Rally Brakes and Investors Fear further OPEC Cuts

The first day of the week was filled with ups and downs, but today the market gets ready for 4-days of jam-packed economic releases. Price declines were mainly seen in equity markets, with the Dow Jones forming its first decline in over a week and the SNP500 seeing its largest decline since the 9th of November. The market generally saw a risk-off sentiment, however, the futures market so far is indicating a positive start to the day.

Crude Oil

Crude oil on the other hand dropped to a new yearly price low, however, later found a large surge of buyers. The price rebound was mainly triggered by large orders as market participants look to benefit from the discounted price and also the weaker US Dollar. Traders are also cautious as to what price caps may do to supply.

Currently, EU members are not able to agree on the price cap. Some nations, such as Poland and France, wish to punish Russia further by lowering the price cap to $60 per barrel. While others are not willing to further pressure their economies, such as Greece, Germany and Cyprus, who are requesting a $65-$70 price cap. Lastly, investors are concerned OPEC may again look to reduce production levels to support prices. This is something which was done in the first week of October.

Crude Oil 1-Hour Chart on November 29th

US Dollar

The US Dollar Index this morning has declined by 0.50% but remains above 106.00. The EUR/USD managed to cross to a new price move, but is currently moving within a retracement. Investors are waiting for the Consumer Confidence scheduled for this afternoon and tomorrow’s Fed Chairman speech. Investors are hoping for more clarification from the Fed head.

Currently, experts believe the terminal rate will remain the same, but the regulator will lower the size of the rate hikes. In addition to this, investors will be looking at Friday's employment figures to see how resilient the employment sector has been to the economic decline and high interest rates.

EUR/USD 30-Min Chart on November 29th

Dow Jones

The price movement of Dow Jones saw a very strong and clear downward trend throughout yesterday’s New York Session. The price declined by 1.30% without forming a single bullish retracement. The price this morning has slightly increased, but remains on the lower swing and is experiencing a weaker movement compared to the SNP500 and NASDAQ. Traders looking to further short the asset will be aiming for a breakout of the $33,798 level.

When looking at technical analysis, we have indications of a downward trend in the short-medium term and a retracement in the shorter term. Wave analysis shows the price has broken onto a lower swing, which is an indication of a downward trend. The latest Moving Average crossover is downwards and was formed at the end of yesterday’s Asian Session. However, the Stochastic Oscillator has crossed upwards on the 1-hour Chart and the price remains above the 75-day EMA on the 4-hour chart.
Dow Jones 15-Min Chart on November 29th

An influential factor which not many traders are aware of is the bond market. The bond market has declined significantly over the past month, which has supported the Dow Jones as well as potential lower rate hikes. However, the Bond market has slightly improved over the past few days, making it more attractive for investors. This may support a downward trend if bond yields continue to increase.

However, the index was supported by the earnings report released recently by Pinduoduo. Both the company’s revenue and Earnings per Share increased above economist’s expectations. The price of the stock increased by more than 12% after the market close.

During Monday’s trading session, only 5 of the 30 stocks ended the day on a higher stock price. Whereas, the strongest declines were seen amongst Boeing, 3M and Disney.

Summary:

• The US Dollar Index increased during yesterday’s trading sessions, but declined this morning. 
• Investors turn their attention to US economic releases scheduled for the week, including Powell’s Speech and Friday’s NFP.
• The Dow Jones see’s its first significant decline in a week, but is supported by Pinduoduo’s earnings report.
• Crude oil increases as Sunday’s OPEC meeting edges closer. Investors fear another production cut.