Dow 30: futures little changed as market participants brace for FOMC

Week ahead for the US: FOMC, Nvidia’s GTC, and housing data

When it comes to the week ahead, it will be a significant one with the key item out of the US being the Federal Open Market Committee's (FOMC) decision, statement, projections, and press conference thereafter. They are expected to hold on rates, which is nearly fully priced in (CME's FedWatch), and in turn, it will be about the type of hold, with market participants looking for any clues of what to expect in future meetings with the release of their updated projections and dot plot (market pricing pointing to the first rate cut in the current cycle this June but by an unhealthy majority while not far off fully pricing in a hold for May).

Fed Chairman Powell is likely to retain the 'I'm not in a hurry' theme we've become accustomed to from him and other FOMC members as of late, and more so after the hotter pricing data last week, whether looking at CPI (Consumer Price Index), PPI (Producer Price Index), or trade pricing data.

In terms of US data, there are plenty of items out of the housing sector, with NAHB's housing market index today not far off getting back above 50 (signifying a favourable outlook on home sales), which if it occurs, would be for the first time since July of last year. Both building permits and housing starts tomorrow for the month of February, after January's reading was an obvious miss.

The weekly mortgage applications on Wednesday, where it has shown positive prints as of late, and existing home sales on Thursday to see if the worst is indeed behind on that front. We'll also get preliminary PMIs (Purchasing Managers' Index) that day, but with prints prior in expansionary territory for both manufacturing and services, it means less to worry about on that front for the time being. Nvidia's GTC conference starts today, where its CEO will be speaking, while on the fiscal front, there's the other partial government shutdown deadline this Friday.

Week ahead outside the US: Central bank bonanza

Internationally, preliminary Purchasing Managers' Indices (PMIs) are in focus, particularly where manufacturing has struggled to exit contraction. Central bank decisions worldwide will draw attention, including the Bank of Japan’s (BoJ) rate decision, which is teetering between holding at -0.1% and a possible hike to 0%. The Reserve Bank of Australia (RBA) is also expected to maintain its current rate, while the People’s Bank of China (PBoC) is likely to keep its Loan Prime Rate (LPR) unchanged after last month's adjustments. The Swiss National Bank (SNB) and the Bank of England (BoE) will announce their rate decisions, with markets speculating on future cuts. Additionally, CPI figures from Canada, the UK, and Japan will be released, adding to the global economic picture.

Dow Technical analysis, overview, strategies, and levels

The previous weekly 1st Resistance level initially held, with little on offer for conformist buy-breakouts that failed on the pullback, offering significantly more for contrarian sell-after-reversals. This process shifted a technical indicator from green to neutral.

Regarding the daily performance late last week, which saw a larger struggle, there was initial favour for conformist buy-after-significant reversals off Thursday's 1st Support, but eventual failure with Friday's lows reaching its 2nd Support. Contrarians also came out ahead via sell-breakout strategies, with two calculations indicating a negative DMI (Directional Movement Index) cross occurring there.

IG client* and CoT** sentiment for the Dow

CoT speculators have been increasing their heavy buy bias despite the pullback in price. Although not yet notable, they prefer to remain in heavy buy territory for quite some time (longs +346 lots, shorts -1,224). IG clients are relieved with any pullback in price, given the heavy sell bias among them. Since the start of last week, this has dropped to 72% due to the slow initiation of shorting into price gains.

Dow chart with retail and institutional sentiment

• _{*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of the start of this week for the outer circle. Inner circle is from the start of last week.}
• _{**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.}