Stock Indices: Dow Jones rises on Tuesday after its sharpest daily drop in a month

On Tuesday Dow Jones Industrial Average traded within the range 15,942.37-16,118.89. The benchmark closed at 16,049.13, gaining 0.30% (47.24 points) on a daily basis. The daily low has been the lowest level since August 26th, when the average slipped as low as 15,676.26. On September 28th the gauge of blue chip companies plunged 1.92% at the close, marking its steepest daily loss since September 1st, when it plummeted 2.84%. In weekly terms, DJIA fell 0.43% last week, while marking a second straight period of losses.

Among the companies included in the benchmark, 9 posted a daily decline on Tuesday and 21 posted a daily gain. The most considerable daily drop was observed at Apple Inc (AAPL), or 3.01% to USD 109.06, despite the report of record first weekend sales of its newest Iphone products. It has been the third straight daily decline and also the sharpest one since September 1st, when the companys shares went down 4.47%.

At the same time, the shares of 3M Company (MMM) registered the most notable daily increase within the DJIA, or 2.29% to reach USD 141.55. It has been the most considerable daily increase since September 8th, when 3M stock added 2.57%.

US Consumer Confidence at highs unseen since January

Yesterday the Conference Board research group reported that its gauge of consumer sentiment increased to 103.0 in September, outpacing the median forecast by analysts, which pointed to a drop to 96.1. Septembers index value has been the highest since January this year, when the gauge was reported at 103.8.

“Consumers’ more positive assessment of current conditions fueled this month’s increase, and drove the Present Situation Index to an 8-year high”, said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ expectations for the short-term outlook, however, remained relatively flat, although there was a modest improvement in income expectations. Thus, while consumers view current economic conditions more favorably, they do not foresee growth accelerating in the months ahead”, Franco added.

Consumers viewed current conditions in a more positive manner in September. The share of respondents stating that business conditions remain “good” rose from 23.7% to 28.0%, while the share of those stating business conditions remain “bad” shrank from 17.8% to 16.7%. Consumers expressed mixed opinions in regard to the US labor market. The share of respondents who claim that job positions in the country are “plentiful” expanded from 22.1% to 25.1%. On the other hand, the share of those stating that jobs are “hard to get” increased as well, reaching 24.3% from 21.7% in the prior survey.

Change in Employment by ADP

Employers in the US non-farm private sector probably added 195 000 new jobs during September, according to the median estimate by experts, Automated Data Processing Inc. (ADP) may report at 12:15 GMT today. If so, this would be the largest gain in jobs since June, when 237 000 positions were added. 190 000 new positions were reported in August. The keenly anticipated official government report on US Non-farm Payrolls is scheduled for release on Friday.

Correlation with other indices

Taking into consideration the daily closing levels of the major stock indices examined and the period August 21st-August 25th, we come to the following conclusions in regard to the strength of relationship:

DJIA to RTSI (0.9890, or very strong)
DJIA to S&P/TSX 60 (0.9598, or very strong)
DJIA to CAC 40 (0.9589, or very strong)
DJIA to DAX (0.9567, or very strong)
DJIA to Euro Stoxx 50 (0.9563, or very strong)
DJIA to Hang Seng (0.7533, or strong)
DJIA to Bovespa (0.7308, or strong)
DJIA to FTSE 100 (0.5896, or strong)
DJIA to KOSPI (0.4562, or moderate)

During the past week, Dow Jones Industrial Average tended to have moved almost equally in one and the same direction with 5 major indices. The strength of such a relationship was the most pronounced between DJIA and the Russian RTSI and the least pronounced between DJIA and Euro Stoxx 50.

Additionally, DJIA tended to have moved strongly in one and the same direction with Hang Seng, Bovespa and FTSE 100 during the period in question.

Nikkei 225 has been excluded from the calculation due to three days of national holidays in Japan, which the country celebrated last week.

Daily and Weekly Pivot Levels

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

R1 – 16,065.31
R2 – 16,081.49
R3 (range resistance) – 16,097.67
R4 (range breakout) – 16,146.22

S1 – 16,032.95
S2 – 16,016.77
S3 (range support) – 16,000.59
S4 (range breakout) – 15,952.04

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

Central Pivot Point – 16,303.21
R1 – 16,590.06
R2 – 16,865.45
R3 – 17,152.30

S1 – 16,027.82
S2 – 15,740.97
S3 – 15,465.58