Stock Indices: Dow Jones falls for the first time in four days as Wal-Mart same-store sales disappoint

On Thursday Dow Jones Industrial Average traded within the range of 16,390.84-16,502.90. The benchmark closed at 16,412.47, shedding 0.25% (41.36 points) on a daily basis. It has been the first drop in the past four trading days. The daily high has been the highest level since February 1st, when the blue-chip benchmark advanced as high as 16,510.98. In weekly terms, DJIA lost 1.43% of its value last week, which has been the fourth drop in the past six weeks and also a second consecutive one. Dow has slipped 0.33% so far during the current month, following two successive months of decline.

Among the companies included in the benchmark, 20 posted a daily decline on Thursday and 10 posted a daily gain. Shares of Wal-Mart Stores Inc (WMT) plummeted the most yesterday, going down 3.01% to close at $64.12. The daily rate of decrease has been the steepest one since October 14th 2015, when Wal-Mart plunged 10.04%. February 18th low of $62.35 per share has been the lowest price level since January 22nd, when a low of $62.13 per share was registered, while the daily volume has been the highest since October 15th 2015. The largest retailer in the US reported a 7.9% slump in total revenue to $129.7 billion in the final quarter of 2015, as same-store sales lowered due to unfavorable exchange rate of the US dollar, a number of store closures and deflated prices of food. The retailer also reduced its forecast for sales growth regarding the fiscal year 2017, which started this month. A relatively flat growth rate is currently projected compared to the preceding estimate of 3%-4% growth.

At the same time, the shares of International Business Machines (IBM) registered the most notable daily increase within the DJIA, going up 5.04%, to close at $132.45, while marking the fourth consecutive trading day of gains. The daily gain rate has been the sharpest one in at least 2 years. February 18th high of $134.00 per share has been the highest price level since January 13th, when a high of $134.28 per share was reached, while the daily volume of 9.95M has been the highest since January 20th. Yesterdays advance was a result of Morgan Stanleys upgrade of IBM to “Overweight”, with the price target being raised to $140 from $135.

On a weekly basis, 28 shares posted gains, while only 2 (Wal-Mart and McDonalds) posted a slump during the week ended on February 12th.

Correlation with other indices

Taking into consideration the daily closing levels of the major stock indices examined and the period February 8th-February 12th, we come to the following conclusions in regard to the strength of relationship:

DJIA to RTSI (0.8691, or very strong)
DJIA to FTSE 100 (0.8523, or very strong)
DJIA to S&P/TSX 60 (0.8193, or very strong)
DJIA to CAC 40 (0.8027, or very strong)
DJIA to Euro Stoxx 50 (0.7766, or strong)
DJIA to DAX (0.7522, or strong)
DJIA to Nikkei 225 (0.2588, or weak)

During the past week, Dow Jones Industrial Average tended to have moved almost equally in one and the same direction with 4 major indices. This relationship has been the most pronounced between Dow and the Russian RTSI and the least pronounced between Dow and the French CAC 40.

Additionally, DJIA tended to have moved strongly in one and the same direction with the German DAX and the European Euro Stoxx 50 during the week.

DJIA tended to have shown an insignificant correlation with the Japanese Nikkei 225 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 – 16,422.74
R2 – 16,433.01
R3 (range resistance) – 16,443.29
R4 (range breakout) – 16,474.10

S1 – 16,402.20
S2 – 16,391.93
S3 (range support) – 16,381.65
S4 (range breakout) – 16,350.84

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

Central Pivot Point – 15,892.91
R1 – 16,282.82
R2 – 16,591.79
R3 – 16,981.70

S1 – 15,583.94
S2 – 15,194.03
S3 – 14,885.06