Stock market under bearish pressure after China’s data

The stock market might open lower today after the release of China’s trade balance data earlier.

• China’s trade balance comes in at $80.6 billion vs. the expected $70.6 billion.
• Imports -12.4% vs. consensus -5.0% YoY
• Exports -14.5% vs. consensus -12.5% YoY

The increase in China’s trade balance is not positive as imports and exports show a down-trending trend which is telling a weak outlook for the global economy. It means slowing down in the global economy might have an impact on U.S. and others. However, China’s government might start ramping up stimulus which might drive bullishness in the market. At the current time, traders will continue waiting for the stock market to do a pullback for a chance to enter more long positions.

Technical Analysis

Dow Jones Industrial Average (INDU)

DJIA index made a bullish close yesterday which put a halt to the bearish correction. The index might attempt to continue the bullish movement to target a new higher high. However, if the index starts moving lower again then the level around 34,500 is the place to look for bullish reactions. We think the index will continue the bullish movement but prepare for a bearish correction before the Fed FOMC meeting next month.

Lowe’s Companies Inc (LOW)

LOW share prices traded lower after reaching the $237.21 high. The share prices might extend the bearish movement to target the daily SMA 100 and the horizontal line at $215.33. Traders could wait for bullish reactions near the current level and the daily SMA 100. When there are bullish reactions, traders could enter long positions targeting a new higher high.