Geopolitical situations to drag the market

Stock market across the world is on defensive following the trade tension and potential dispute between Italy-Europe over budget. Earlier in the Asian session, China lowered the reserve requirement ratio by 100 bps. It means the government injecting 750 billion yuan cash value to the economic system to sustain the impact of trade wars with U.S.

It seems the government worry over pro-longed trade wars with the U.S and prepares for the worst. Meanwhile, DJIA futures pointed lower almost 100 points and ready to resume the consecutive bearish closes.

Asian & European Stock market

Asian stock market slide on Monday. Nikkei closed for the day, China stock market down 104.84 points (-3.72%) to 2,716.51, and Australia ASX 200 down 85.20 points (-1.38%) to 6,100.30. European stock market also slides on Italy fear. DAX Germany down 0.77%, UK FTSE down 0.54%, Euro STOXX600 down 0.81%.

Technical Analysis

Dow Jones Industrial Average (INDU)

A third day bearish close and fresh low at the end of the week is strong confirmation that Dow Jones Industrial Averages will move further lower. We still expect the index will reach the bottom of the channel or the daily SMA 50 before the trend could trend into bullish. Meanwhile, traders will sit down and targetting strong company share prices which severely sold.

AT & T Inc (T)

The share prices of T is traded near the daily SMA 200 after climbing from yearly low $30.13. We might favor bullish scenario by a breakout above SMA 200 to the level around $35.50 and correction to test SMA 200 before launching upward. However, a strong bearish pattern at the current level will produce a double top and lead the share prices down to test SMA 50, trendline and $32.50. Traders could position themselves for either scenario with a tight stop near SMA 200.