Dow Jones, Nasdaq 100, DAX 30 Forecasts: Trade and Earnings to Headline

Dow Jones, Nasdaq 100, DAX 30 Outlooks:

• The week ahead marks the advent of Q4, 2019 earnings season for many companies, an arrival that will surely have an impact on some of the Dows largest components

• On Wednesday, the Fed is set to announce its repo operations schedule for the coming weeks

• Meanwhile the DAX 30, alongside US indices, will await details of the US-China Phase One trade deal agreement set to be signed on Thursday

Dow Jones Fundamental ForecastOutlook: Bearish

The Dow Jones was able to avoid a serious retracement last week but may have its toughest tests ahead. Earnings season is set to kick off on Tuesday with the countrys largest banks when JP Morgan, Citigroup, Wells Fargo and Bank of America release their quarterly results, followed by a string of other high-profile earnings to round out the week. In total, more than 15% of the Dow Jones will divulge their fourth quarter performances to the public. On a single-stock basis, this will be the most important theme to watch.

Dow Jones Price Chart: 4 - Hour Time Frame (October 2019 – January 2020) (Chart 1)

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As for the index as a whole, Wednesday‘s repo schedule announcement and Thursday’s reported US-China Phase One trade deal signing are poised to be the headline issues. An aggressive balance sheet expansion since September has allowed for the Industrial Average to reach new heights – combined with the euphoria brought about by the initial announcement of the trade deal. If either of these themes are threatened, it could work to erode the Industrial Average.

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However, comments from Fed Vice Chairman Richard Clarida suggest the Fed‘s repo operations will continue into April, an encouraging sign if history is any indication. On the other hand, the market’s reaction to Thursdays prospective trade deal may be more tempered. As I noted last week, the initial reaction to the deal sparked a wave of bullish price action, despite scarce insight into what it actually contains. With that in mind, there exists a real possibility the specifics disappoint expectations and the market reacts negatively.

Nasdaq 100 Fundamental ForecastOutlook: Bearish

To that end, the most acute pain – if any is felt at all – may be dealt to the Nasdaq 100. Filled with volatile tech stocks, a substantial reassessment of the trade deals impact on profit outlooks could seriously undermine companies with large exposure to the conflict. Micron, Qualcomm and Intel are some of the stocks that may be impacted directly, but companies like Caterpillar may also feel a pinch if the phase one agreement shows there is little end in sight for the trade war as a continuation of the conflict would likely see global growth forecasts altered. In turn, these stocks could adversely influence the Nasdaq and pressure it lower.

DAX 30 Fundamental ForecastOutlook: Neutral

Like the Dow Jones and the Nasdaq 100, the DAX 30 will likely look to the outcome of the US-China meeting in Washington. Despite its distance from the conflict, the implications for global growth cannot be ignored, and the resolution may give insight on how an eventual US-EU trade conflict may progress. With that in mind, technical levels for the DAX may provide better insight on the indexs intraday inclinations until the outcomes of the larger macroeconomic issues are offered to the public.

DAX 30 Price Chart: 4 – Hour Time Frame (October 2019 – January 2020) (Chart 2)

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In addition to the high-profile issues scheduled for next week, various data releases may assert their influence on a shorter-term basis. Retail sales, CPI and consumer sentiment data are all due for the United States, while the DAX will look to German GDP and Eurozone CPI for insight on its regional economy.