E-mini Dow Jones Industrial Average (YM) Futures Analysis – July 13, 2017 Forecast

September E-mini Dow Jones Industrial Average futures are trading slightly higher shortly after the opening and during the second day of testimony by Fed Chair Janet Yellen.  She continues to answer questions about monetary policy, banking, regulations and fiscal policy.

I think yesterday’s rally was an overreaction to Yellen’s remarks. In going over her statements, I couldn’t find anything that deviated substantially from the Fed’s monetary policy statement and the latest Fed minutes.

I also believe that the low volume and herd theory buying had a lot to do with the size of rally. If what she said was strong enough to convince investors that the Fed was not going to raise rates later this year, there would’ve been a follow-through move.

I took a look at a lot of bullish stock market headlines this morning, all after the fact, of course, so the contrarian in me feels that I should be looking at the short side today. Furthermore, I don’t think Yellen said anything that would suggest this market is ripe for another leg up.

After Yellen stops talking, the Dow could begin a sideways to lower trade into the close as investors prepare for Friday’s earnings reports and the U.S. consumer inflation report.

Technical Analysis

The main trend is up. The move through the previous top on Wednesday reaffirmed the uptrend. The trend will turn down on a trade through 21226, the new main bottom.

The new short-term range is 21226 to 21531. If there is no follow-through rally then its retracement zone at 21379 to 21343 will become the primary downside target.

We could also see a break begin if the Dow makes a higher high and a lower close.

Forecast

There’s not much to forecast today because we’re in a news driven market. The direction of the market today will be determined by trader reaction to yesterday’s high at 21531. We may take out this out and zoom higher, we may not take this out and drift lower, or we may take it out and close lower. It all depends on how the herd interprets Yellen’s comments.