Current trend

The Dow Jones Industrial Average is showing downward dynamics in the area of 40303.0 amid negative expectations from the publication of corporate reports.

American Express Co. and The Travelers Companies Inc. reported financial results on Friday. Contrary to analysts' expectations, one of the largest payment operators American Express Co. missed revenue estimates of 16.30 billion dollars, down from 16.59 billion dollars, but earnings per share came in at 3.49 dollars, up from 3.23 dollars. In turn, the insurance company The Travelers Companies Inc. posted revenue of 11.28 billion dollars, missing the 11.35 billion dollars analysts had expected but beating the 10.01 billion dollars recorded in the previous year, and earnings per share increased to 2.29 dollars from 2.25 dollars.

Today, a report from the corporate communications market leader, Verizon Communications Inc., will be published. Analysts expect revenue of 33.05 billion dollars, up slightly from the 33.0 billion dollars reported in the prior-year quarter, and earnings per share are forecast at 1.15 dollars, down from 1.21 dollars.

There is also a correction in the bond market: today the rate on 10-year debt securities increased to 4.224% from 4.153% a week earlier, and on 20-year bonds — to 4.530% from 4.487%.

The growth leaders in the index are Merck & Company Inc. ( 1.22%), Nike Inc. ( 0.44%), UnitedHealth Inc. ( 0.18%).

Among the leaders of the decline are The Travelers Companies Inc. (–7.76%), Intel Corp. (–5.42%), American Express Co. (–2.74%).

Support and resistance

On the daily chart, the index quotes continue their corrective dynamics, moving away from the channel resistance line with boundaries of 41350.0–38700.0.

Technical indicators that support the upward signal are actively slowing it down: the range of EMA fluctuations on the Alligator indicator is narrowing down, and the AO histogram is forming new corrective bars, being above the transition level.

Support levels: 40000.0, 38900.0.

Resistance levels: 40600.0, 41350.0.

Trading tips

If the asset reverses and starts declining and the price consolidates below 40000.0, short positions can be opened with the target at 38900.0. Stop-loss — 40500.0. Implementation time: 7 days and more.

If growth continues, long positions that can be opened if the price overcomes the channel resistance at 40600.0 with a target at 41350.0 and stop-loss at 40300.0 will be relevant.