Stock Indices: Dow Jones falls a second day ahead of US employment numbers

On Thursday Dow Jones Industrial Average traded within the range of 17,779.19-17,929.51. The benchmark closed at 17,863.43, ticking down 0.02% (4.15 points) on a daily basis, while extending the loss from Wednesday. The daily low has been the lowest level since November 2nd, when the average went as low as 17,655.02. In weekly terms, DJIA advanced 0.10% last week, while marking its fifth consecutive week of gains. The weekly advance, however, has been the most modest one since the week ended on November 30th 2014, when DJIA added 0.10%. For the current month, Dow is up 1.13%.

Among the companies included in the benchmark, 14 posted a daily decline on Thursday and 16 posted a daily gain. Shares of Chevron Corporation (CVX) plummeted the most yesterday, going down 2.29% to close at USD 94.55, while extending losses from Wednesday. The daily rate of decrease has been the sharpest one since October 26th, when Chevron lost 2.71%.

At the same time, the shares of UnitedHealth Group Incorporated (UNH) registered the most notable daily increase within the DJIA, going up 1.39%, to close at USD 116.23, following two consecutive trading days of losses. The daily gain rate has been the largest one since October 27th, when UnitedHealth added 2.44%.

On a weekly basis, 23 shares posted gains, while 7 posted a slump during the week ended on November 1st.

Dow Jones Industrial Average has been trading above the weekly central pivot level for the past three trading days. In case the gauge manages to break above November 3rd high of 17,977.85, a test of the psychological 18,000.00 level seems probable. A break above it may send the average up for a test of July 21st high of 18,096.67.

Today Dow may be highly influenced by the official government report on US employment, scheduled for release at 13:30 GMT. Employers in all sectors of economy in the United States, excluding the farming industry, probably added 180 000 new jobs in October, according to the median forecast by experts, after a job gain of 142 000 in September. Average Hourly Earnings probably increased 0.2% in October compared to the prior month, according to market expectations, after remaining flat in September. At the same time, the rate of unemployment in the country probably remained steady at 5.1% for a third consecutive month in September. It has been the lowest level since April 2008, when a rate of 5.0% was reported.

Correlation with other indices

Taking into consideration the daily closing levels of the major stock indices examined and the period October 26th-October 30th, we come to the following conclusions in regard to the strength of relationship:

DJIA to Euro Stoxx 50 (0.6897, or strong)
DJIA to DAX (0.6229, or strong)
DJIA to FTSE 100 (0.5847, or strong)
DJIA to CAC 40 (0.4843, or moderate)
DJIA to S&P/TSX 60 (0.4768, or moderate)
DJIA to Nikkei 225 (0.2510, or weak)
DJIA to RTSI (0.1247, or weak)
DJIA to KOSPI (-0.3576, or moderate)
DJIA to Hang Seng (-0.4552, or moderate)
DJIA to Bovespa (-0.5209, or strong)

During the past week, Dow Jones Industrial Average tended to have moved strongly in one and the same direction with 3 major indices, while moving strongly in the opposite direction compared to the Brazilian Bovespa.

Additionally, DJIA tended to have moved to a moderate extent in one and the same direction with the French CAC 40 and the Canadian S&P/TSX 60 during the period, while moving to a moderate extent in the opposite direction compared to the South Korean KOSPI and Hong Kongs Hang Seng.

DJIA tended to have shown an insignificant correlation with the Japanese Nikkei 225 and the Russian RTSI 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 – 17,877.21
R2 – 17,890.99
R3 (range resistance) – 17,904.77
R4 (range breakout) – 17,946.11

S1 – 17,849.65
S2 – 17,835.87
S3 (range support) – 17,822.09
S4 (range breakout) – 17,780.75

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

Central Pivot Point – 17,668.02
R1 – 17,795.48
R2 – 17,927.41
R3 – 18,054.87

S1 – 17,536.09
S2 – 17,408.63
S3 – 17,276.70