Dow Jones gains as Nasdaq 100 falls post infrastructure bill, Nikkei 225 may rise

Monday's Wall Street trading session recap

Equities on Wall Street wrapped up Monday on a mostly positive note. Wall Street, US 500 and US Tech 100 futures closed +0.27%, +0.08% and -0.15% respectively. This seemed to reflect a rotation trade into cyclically-oriented companies and away from growth-linked opportunities. Tech stocks underperformed, with Tesla falling almost 5% following a downside gap.

The industrial sector lead the charge in the Dow Jones, with Caterpillar Inc (All Sessions) (CAT) shares climbing 4.07%. This followed Congress clearing a US$1 trillion bipartisan infrastructure bill after markets closed for trading last Friday. The ten-year Treasury yield trimmed losses from Friday’s pullback following October’s non-farm payrolls data.

Dow Jones technical analysis

Dow Jones futures confirmed a breakout above the 100% Fibonacci extension at 36028, further exposing the 123.6% level at 36652. This follows the formation of a bullish Golden Cross between the 20- and 50-day Simple Moving Averages (SMAs). A lack of RSI divergence underscores that momentum is seemingly in favor of this recent leg higher. A turn lower may place the focus on the August peak at 35547.

Dow Jones sentiment analysis - Mixed

According to IG Client Sentiment, about 25% of retail traders are net-long the Dow Jones. We typically take a contrarian view to crowd sentiment. Since most traders are short, this suggests price may continue rising. But, downside exposure has increased by 5.29% over a daily basis while simultaneously falling by 1.37% compared to a week ago. The combination of current sentiment and recent changes is offering a mixed trading bias.

Tuesday's Asia Pacific trading session

The session from Wall Street could spell a cautiously optimistic tone for Tuesday’s Asia-Pacific trading day. A lack of prominent economic data may place further emphasis on general market mood, especially as traders await US CPI data in less than 24 hours. Australia’s Australia 200 may continue pressuring the October high at 7480, where a breakout could see prices extend gains since September.

Nikkei 225 technical analysis

While the Nikkei 225 Exchange Traded Fund – Japan’s benchmark stock index – continues to predominantly range trade since the beginning of this year, a Symmetrical Triangle seems to have formed recently. The patten is in itself neutral, but can at times signal the resumption of the trend that preceded its formation. A breakout above the triangle could be that signal, exposing the 30345 – 30725 resistance zone.