US equities closed lower overnight as DJIA suffered the second triple digit loss since presidential election. DJIA closed down -111.36 pts, or -0.56%, at 19833.68. S&P 500 lost -18.96 pts, or -0.84%, to close at 2249.92. NASDAQ also dropped -48.88 pts, or -0.89%, to close at 5438.56. While a day of decline in thin holiday trading is not enough to warrant reversal in trend, the synchronous move with other markets suggest that the markets overall is turning into a consolidation phase. To be more specific, 10 year yield closed down -0.057 to 2.506. 30 year yield also lost -0.055 to close at 3.084. Dollar index is back at 102.90 after edging higher to 103.63. Gold breaches 1150 again, comparing to recent low at 1124.3. We'd probably see more consolidative trading ahead, at least before US non-farm payroll to be released on January 6.
10 year yield's sharp fall now raises the chance of short term topping at 2.621, on bearish divergence condition in daily MACD. Focus is back on 2.424 near term support. As long as 2.424 holds, price actions from 2.621 are viewed as a brief consolidation and recent up trend should resume soon. Break of 2.621 will extend recent rise to next key resistance level at 3.036. However, break of 2.424 will confirm topping and bring pull back to 55 day EMA, now at 2.221, or even further to 38% retracement from 1.336 to 2.621 at 2.130.
S&P 500 could have also topped at 2277.53 after hitting medium term channel resistance. Focus in back on 2248.44 near term support level. Sustained break there would at least bring pull back to 55 day EMA (now at 2205.57) or even further lower to channel support. Nonetheless, firm break of 2277.53 will accelerate recent trend to 61.8% projection of 1074.77 to 2134.71 from 1810.10 at 2465.14.
Pull back in stocks and yield could drag down the Dollar in near term. The dollar index is having a similar technical picture, with bearish divergence condition seen in daily MACD. Near term focus is on 102.52 support. Break there would open up deeper pull back towards 55 day EMA (now at 100.55). Nonetheless, firm break of near term high at 103.65 will re-accelerate near term up trend to next projection target at 105.19.
As for today, Eurozone will release M3 money supply in European session. US will release trade balance and jobless claims.