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XTB TRADEBEAT

Stocks higher ahead of Wall St open; GE relegated from Dow

Summary:

  • Stocks in Europe and US trade higher ahead of US session
  • US500 sees dip buyers step in
  • GE dropped from DJIA 

Stock indices are trading near their highest levels of the day ahead of the US cash open, with the US500 recovering the vast majority of the recent losses. The market dropped sharply during the Asian session on Monday night with growing fears surrounding an escalating trade war causing a drop of more than 40 points. However, a low was made not long after the European open and the market saw buyers step in and buy the dip and a long wick is evident below on a D1 candle.  

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 US500 dropped pretty sharply yesterday but recovered well showing a long wick below the D1 candle. The market remains between the 8 and 21 EMAs which are in a positive orientation. Source: xStation

The outlook for US stocks remains a little uncertain from here, and despite the recovery some are still concerned of the downside risks. Speaking on CNBC earlier, Federated Investor’s Phil Orlando cautioned that he believed there is a cruel summer ahead for stocks ""We’re expecting an air pocket here that will take the market down to let’s say the 200-day moving average over the summer months". The 200-day SMA currenlty resides at 2667, around 100 points below the market and while it is upward sloping a fall back to the indicator would still represent a sizable decline. 

General Electric (GE) is in the the news today after the US stalwart was dropped from the Dow Jones Industrial Average (DJIA and US30 on xStation). GE was a founder member of the Dow but it has endured some tough years of late, shedding some 78% of its value since it peaked at $500B back in 2000. The stock’s current price just below 13 is still far above the lowest level on record of 6 seen in early 2009, but given that the US30 is now far higher than it was back then, its relative value for the benchmark is much lower. 

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 GE has been in a downtrend for many years now and the stock has recently been dropped from the DJIA. Source: xStation

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