Major US stock indexes began the month with a slight increase. Investors are waiting for a monthly report on the US labor market, which will be published at 12:30 (GMT). This report is extremely important in assessing the prospects for the dollar and the US stock market, because it characterizes the stability of the US economy, the largest in the world. On Thursday, US stock indexes rose thanks to a series of positive macro data. According to a report published by the US Department of Commerce on Thursday, the costs and incomes of Americans grew quite rapidly in July.
The index of prices for personal consumption expenditure (PCE) increased by 1.4% compared to the same period of the previous year. The income of Americans in July rose by 0.4% compared to June, which was the strongest growth since February. Americans have a large amount of cash for the next few months ahead, which could have a positive impact on GDP growth.
Data from ADP for August, which characterize the level of employment in the private sector of the US economy, also came out better than the forecast, indicating that the labor market is approaching full employment.
And at the same time, the US economy has a controversial situation: the growth of consumer spending in combination with the fall in unemployment indicates a fairly rapid and stable economic growth. However, inflation still remains slow, below the target level of the Fed in 2%.
In the data block from the US labor market, investors are particularly interested in the wage growth indicator, which will be used to judge the prospects for monetary policy in the coming months. Although unemployment is low and job creation is stable, wages have been rising at a moderate pace for a long time.
In view of the low inflation of space, the Federal Reserve has little to raise rates.
According to futures on federal funds, which track the CME Group, investors estimate the probability of a rate hike by the end of December at 37%.
And yet, the overall state of the US economy is encouraging, prompting investors to buy high-yielding high-risk assets. This is evidenced by the multi-month bullish trend of the US stock market.
And, if today's publication of data from the US labor market is also positive, close to the forecast values, the US stock indexes will continue to grow.
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Support and resistance levels
DJIA maintains positive dynamics and continues to grow in the uplink on the daily chart, striving for the level of 22177.0 (the highs of the year and August).
Long positions are relevant. Only in case of breakdown of the important support levels 21800.0 (EMA200 on the 4-hour chart), 21700.0 (EMA50 and the bottom line of the ascending channel on the daily chart), we can return to consideration of short positions on the DJIA.
Indicators OsMA and Stochastics on the 4-hour, daily charts are on the buyers side.
In case of breakdown of the support level 21700.0, the target of the decrease may be support levels 20750.0 (EMA200 on the daily chart), 20630.0 (Fibonacci level of 23.6% correction to the wave growth from the level of 15660.0 after recovery in February this year to the collapse of the markets since the beginning of the year. The maximum of this wave, and the Fibonacci level of 0%, is near the mark of 22177.0). Levels 20750.0, 20630.0, thus, are key to long-term bullish trend of DJIA.
Support levels: 21800.0, 21700.0, 21500.0, 21300.0, 21000.0, 20750.0, 20630.0
Resistance levels: 22060.0, 22177.0, 22300.0
Trading Scenarios
Buy Stop 22050.0. Stop-Loss 21950.0. Take-Profit 22177.0, 22300.0, 22350.0
Sell Stop 21950.0. Stop-Loss 22050.0. Take-Profit 21800.0, 21700.0, 21500.0, 21300.0, 21000.0, 20750.0
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