US stocks close in the red exposing a critical level in the Dow Jones at the 78.6% Fibo support
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US stocks close in the red exposing a critical level in the Dow Jones at the 78.6% Fibo support

  • The Dow Jones Industrial Average lost 133.17 points, or 0.5%, to 25,673.46.
  • The S&P 500 index SPX shed 18.20 points, or 0.7%, to 2,771.45.
  • The Nasdaq Composite Index COMP lost 70.44 points, or 0.9%, to close at 7,505.92.  

U.S. stocks declined on Wednesday ending lower for a third consecutive session this week exposing a critical level on the charts for the DJIA. The U.S. data failed to impress in the Federal Reserve’s Beige Book showing that the partial government shutdown had weighed on economic activity – 10 of the central bank’s 12 districts seeing “slight-to-moderate” growth in late January and February.

In other data, the ADP jobs report estimated that the private sector put on 183,000 jobs in February, below estimates of 187,500 new jobs ahead. The data comes ahead of this week’s key nonfarm payrolls report:

“Following two consecutive reports with initial 300k+ prints, we look for payrolls to mean-revert to 190k in February. We also expect the phase-out of the impact from the government shutdown to be reflected on a tick down in the unemployment rate to 3.9%. Lastly, we forecast wages to rise by a “soft” 0.3% m/m pace (3.3% y/y) in February aided by a favorable reference week,” analysts at TD Securities explained.  

DJIA levels

The DJIA’s 78.6% Fibo of the Oct swing highs to Dec rout lows with the confluence of the rising trend-line support is now feeling some pressure and it could give way to a sell-off below the 21-D SMA with a key downside target at the 61.8% Fibo level positioned beneath the 25000 psychological level at 24847. Below it, the next target on the horizon will be the 38.2% Fibo at 24500 and then the 50% Fibo just below the psychological 24000 level.

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