Dow Stalls at Key Resistance Ahead of US Core PCE

Dow Stalls for NowThe Dow Jones came under heavy selling pressure yesterday as the market tested key resistance at the 35503.24 level.  Prior to yesterday’s sell-off, the Dow had been on a strong winning streak following the breakout above the 34523.58 level earlier in the month. Shifting Fed expectations have helped drive demand for stocks with the Fed now seen holding rates unchanged through to a projected rate cut as early as March next year. While this narrative holds, stocks look likely to remain underpinned near-term, particularly with the Fed now adjusting its forecast to no longer project a recession in the US this year.PCE Data in FocusLooking ahead today, the focus will be on the latest US core PCE data which is expected to rise to 0.3% m/m from 0% prior. If seen at this level, or above, stocks might take some near-term pause with USD likely to find some support. However, should we see the data undershoot forecasts, this will be heavily bearish for USD near-term, allowing stocks to rally into next week. Traders will also be paying close attention to the employment cost index also on deck today, forecast to soften to 1.1% from 1.2% prior.Technical ViewsDow JonesThe rally in the Dow has stalled for now into a test of the 35503.24 level resistance. With momentum studies bullish the focus remains on further upside and an eventual break higher while price holds above the 34523.58 breakout zone. Only a break back under that level will negate the near-term bullish view.