U.S. Home Starts Up, Blue Chips Down - Forex News by FX Leaders
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U.S. Home Starts Up, Blue Chips Down

Posted Tuesday, November 19, 2019 by
Shain Vernier • 2 min read

The U.S. indices are trading mixed, with blue chips lagging and the tech sector setting the pace. At the half-way point of the American session, the DJIA DOW (-92), S&P 500 SPX (-2), and NASDAQ (+26) are having very different days. Earnings reports and impatience over the signing of “Phase 1” of the U.S./China trade deal are being deemed the primary market drivers.

On the economic data front, this morning brought the release of the U.S. new construction figures from October. Here is a look at the highlights:

Event                                                        Actual     Projected     Previous

Building Permits Change (Oct)             5.0%            0.0%               -2.4%

Housing Starts (MoM, Oct)                   1.314M        1.320M          1.266M

Housing Starts Change (Oct)                  3.8%            0.6%              -7.9%

This group of Housing Starts and Building Permits numbers from October is extremely positive. With the growth in Building Permits (5.0%) and Housing Starts (3.8%), it appears that dovish FED policy has drawn action to the construction industry. Ultimately, these are positive figures for the U.S. economy as a whole.

However, blue chip stocks have struggled to find solid footing. Let’s take a look at the intermediate-term DJIA outlook for some perspective.

DJIA, Blue Chips Back Beneath 28,000

Monday was a historic session for the DJIA, with values cracking the 28,000 level. Today has been a different story. Values are trending south and have fallen beneath this key psychological level.

Dow Jones Industrial Average (DJIA), Weekly Chart
Dow Jones Industrial Average (DJIA), Weekly Chart

Overview: The chart above is a look at where the DJIA closed Monday’s trade. Since this time, we have witnessed a modest pullback and slump beneath 28,000. In all honesty, this shouldn’t come as much of a surprise. Given the lack of technical resistance levels, 28,000 is very likely to become a battleground for the bulls and bears at least until the end of the year.

Since early October, the DJIA has been on a roll. FED rate cuts and optimism over global trade have spearheaded the bullish breakout for the blue chips. Until we see a market fundamental sway public opinion, it is best to be long or on the sidelines in the DOW.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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