Durable Goods Up, U.S. Stocks Down

Posted Thursday, July 25, 2019 by
Shain Vernier • 1 min read

Today’s Wall Street open has been uncharacteristically weak following a strong collection of U.S. Durable Goods figures. For the first half-hour of trade, the DJIA DOW (-135), S&P 500 SPX (-14), and NASDAQ (-56) are firmly in the red. The big story is once again the lagging performance of Boeing, which is off about 7.5% in the past four days. This is a big deal to the DOW, as Boeing is one of its largest components.

In addition to the struggles of Boeing, global economic concerns are negatively impacting sentiment on Wall Street. During the U.S. pre-market, comments from the ECB suggested that the central bank is to keep rates at current or lower levels well into 2020.

Unfortunately for equities bulls, Boeing and the ECB have overshadowed a positive collection of U.S. Durable Goods figures. Here is a quick look at the data:

Event                                                                        Actual       Projected    Previous

Durable Goods (June)                                              2.0%            0.7%             -2.3%

Durable Goods Except Defense (June)                 3.1%             1.3%             -1.2%

In short, consumption is strong and in line with projections local to an expansive economic cycle. Tomorrow’s U.S. Q2 GDP report will tell the tale ― if positive, the FED may be in a position to rethink next Wednesday’s “protective” round of interest rate cuts.

DJIA Under Pressure Following Strong Durable Goods Report

It has been a rough open for the DJIA. Values are plunging and appear poised to test the lower bounds of this week’s range. Subsequently, the September E-mini DOW is following suit.

September E-mini DOW Futures (YM), Daily Chart
September E-mini DOW Futures (YM), Daily Chart

Overview: The key level for the September E-mini DOW is the 38% Current Wave Retracement (27114) on the daily timeframe. As long as price stays above this area, July’s uptrend will remain intact. If we see bearish action below 27114, a greater downside move is probable by Friday’s closing bell.

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