10:26, 11 October

US30 - Drops Sharply as Markets Consider Fed’s Plans

In the last 24 hours the US30 index has fallen very sharply through any possible support at 26200 and down to its lowest levels since mid-August. After reaching a new all time high last week the US30 index had eased a little in the last week and was enjoying some support from the previous key level of 26200, however this has now clearly given away to immense selling pressure. After enjoying some solid support from the 25000 level, the index had enjoyed several weeks of strong movement pushing through the previous resistance level at 26200 and reaching the all-time highs. For several weeks last month the US30 index had been content to trade within a narrow range near 2018 highs under 26200, before its recent move higher.

The 25000 level had rejected the index on several occasions throughout this year. The 25000 level has been significant as it has offered lots of resistance and would have come as no surprise when it supported the index back in July and August. Around the end of June the index spent several days consolidating above 24000 after a strong fall over several weeks prior to that. The fall saw the index move sharply lower from a three-month high above the resistance level at 25000 down to a near two month low several weeks ago.

In the second half of May the index was meeting stiff resistance right at 25000 which forced the index lower down to a three-week low. In the few weeks before last week’s easing lower, the index had moved quite strongly off the now well-established support level at 23500. This recent range trading is not unexpected after the strong movement higher throughout all last year.

Much of the attention on Wednesday focussed on the Federal Reserve’s plans for raising rates.Fears about rapidly rising rates helped cause the Dow Jones industrial average to drop more than 800 points Wednesday.The Fed has raised interest rates three times this year and is largely expected to hike once more before the end of the year.According to the CME Group's FedWatch tool, market expectations for a December rate increase were at 76.3%.U.S. President Donald Trump was critical of the Fed continuing to raise interest rates despite some recent market turbulence.President Trump said, "I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy.”The most recent September rate increase also drew criticism from President Trump at the time, who said he was "worried about the fact that they seem to like raising interest rates, we can do other things with the money," he said.“Actually, it's a correction that we've been waiting for for a long time, but I really disagree with what the Fed is doing," the President added.At the end of last week the U.S. nonfarm payrolls disappointed and came in well below expectations.The closely followed nonfarm payrolls rose just 134,000, which was well below estimates of 185,000 and the worst performance since September 2017, when a labor strike affected the numbers.