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  • All 11 major sectors finished the day in the positive territory.
  • Communication services rose 2.5% on Tuesday.  
  • CBOE Volatility Index fell more than 5%.

Although it looked like major equity indexes in the U.S. were having a difficult time finding direction during the first half of the day, they gained traction in the afternoon to close the day with decisive gains. The CBOE Volatility Index, Wall Street’s fear gauge, dropped more than 5% on the day to reflect the improvement sentiment.

Led by the strong performance of chipmakers, the S&P 500 Communication Services Index added 2.5% on the day and the S&P 500 Technology Index gained a little over 1%.  Commenting on today’s market action, “Because the impact of the mid-term elections on equities is so poorly defined, we can see it elevating volatility, if not anything,”  Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York, told Reuters.

The trade-sensitive S&P 500 Industrials and the S&P 500 Materials both  rose  2.3% as  US President  Trump’s  optimistic  comments  about  the possibility of reaching a trade deal with Chine helped  ease concerns.  

The Dow Jones Industrial Average gained 431.96 points, or 1.77%, to 24,874.88, the S&P 500 rose 41.39 points, or 1.57%, to 2,682.64 and the Nasdaq Composite added 111.36 points, or 1.58%, to 7,161.65.

DJIA technical outlook by FXStreet Chief Analyst Valeria Bednarik

From a technical point of view, the sharp advance remains as corrective, as the index continues developing well below all of its moving averages, and with the 20 DMA extending its decline below the 100 DMA. Technical indicators have bounced but remain well into the red with the RSI currently at 39.

In the 4 hours chart, the technical outlook is a bit more constructive, as the Dow settled above an anyway bearish 20 SMA, while technical indicators hold near daily highs well into the positive ground, the Momentum losing strength but the RSI still heading north at fresh 1-week highs.

Support levels: 24,833 – 24,781 – 24,729.

Resistance levels: 24,929 – 24,996 – 25,047.