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US30 - Eases from Three Month High Above 26200 after Powell Testimony to Congress



US30 - Eases from Three Month High Above 26200 after Powell Testimony to Congress
Even though the US30 index has declined ever so slightly in the last few days, it has been able to reach a three month high around 26200 in the last week. Several weeks ago the index seemed content to have consolidated in a narrow range right above the significant level of 25,000 before it began its slow climb higher. It was able to resume what has become a very steady climb higher which started back in December. 

At the end of January, the 25000 level offered some resistance to the index however this was quickly broken through, only for the level to prop up the index since, and this level remains key.

For the last few months, the two key levels of 24,000 and 25,000 have been playing a role and influencing price action. In the last couple of months, the index has done very well to move back within the range between these two levels, after falling to its lowest levels in 18 months below 21,500. It met some resistance at 24,000 before moving through. December was several weeks the US30 index would rather forget as it fell very sharply down through any support at the 25,000 level and then also through the 24,000 level down to that 18 month low. As expected the 24,000 level did offer some resistance and it will be interesting to see whether this level props up the index should it decline from its current levels.

In late November it enjoyed a healthy surge higher climbing back above the key 25,000 level to above 26,000 before reversing sharply and falling lower. The last few months have seen the index moving sharply between 24,000 and 26,000 as the volatility and the swings back and forth intensified before the massive drops in December which was the most volatile the index has been in many years. It will be interesting to see whether the peaks from November and December last year provide some resistance to the index in the near future.

Addressing a Senate committee earlier in the week, U.S. Federal Reserve (Fed) Chairman Jerome Powell said the U.S. economy remains strong, but dangers are brewing.  Powell noted that the Fed is keeping a close eye on the state of affairs and is prepared to adapt Fed policy if needed.Despite some challenges from abroad, Mr Powell called the U.S. economic outlook “generally favorable”.  “While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell said in his prepared remarks to the Senate Committee on Banking, Housing and Urban Affairs. “Financial markets became more volatile toward year-end, and financial conditions are now less supportive of growth than they were earlier last year.”  The Fed is also keeping a close eye on other issues outside including Brexit negotiations, as well as China and Europe.  “We will carefully monitor these issues as they evolve,” Powell said.  In recent months Fed officials have been conveying a message of patience with the future policy path, specifically its approach to interest rates.

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