E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Big Decision on Test of 27531 – 27141

September E-mini Dow Jones Industrial Average futures closed lower for a second day on Friday after a volatile session in which stocks that would benefit from the economy reopening tried to offset another steep decline in technology companies.

On Friday, September E-mini Dow Jones Industrial Average futures settled at 28074, down 283 or -1.01%.

Boeing shares rose more than 1% while bank stocks gained broadly. JPMorgan Chase and Citigroup were up 2.2% and 2%, respectively. Bank of America climbed 3.4%. Wells Fargo advanced 1.1%. Cruise operator Carnival climbed 5.4% and United Airlines advanced 2.2%.

On the technology side, down component Microsoft dropped 1.4%. However, Apple ended the day up 0.1% after falling as much as 8.3%.

On the data front, the U.S. unemployment rate fell to 8.4% last month from 10.2% in July, the Labor Department said. Economists polled by Dow Jones expected the rate to decline to 9.8%. As for overall jobs creation, employment in the U.S. grew by 1.37 million in August, topping an estimate of 1.32 million.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out the last swing bottom at 28257.

A trade through 27643 will signal a resumption of the downtrend. The main trend will change to up on a trade through the last swing top at 29180.

The first minor range is 29180 to 27643. Its retracement zone at 28412 to 28593 is potential resistance.

The second minor range is 27392 to 29180. Its retracement zone at 28286 is another potential resistance level.

Since the main trend is down, sellers could come in on a test of these minor resistance levels.

The short-term range is 25881 to 29180. Its retracement zone at 27531 to 27141 is potential support. Counter-trend buyers could come in on the first test of this zone. However, if it fails as support then look for more downside pressure.

Short-Term Outlook

The Dow closed well off its low on Friday, which could mean there were some counter-trend buyers supporting the market. If buyers return then look for a rally into the series of retracement levels at 28286 to 28593. Watch for sellers on a rally into this area, but be prepared for a possible surge to the upside if buyers can take out 28593 with conviction. Sellers are going to try to form a potentially bearish secondary lower top.

If the selling pressure resumes then look for the break to extend into 27531 to 27141. To some short-term investors, this zone represents value so they may start to buy. We could see a short-term support base fill inside this zone.

The daily chart indicates there is plenty of room to the downside if 27141 fails as support with the next major target the July 30 main bottom at 25881.

At this time, we’re not reading into the two-day break because it looks as if investors were aggressively rotating out of technology stocks and into defensive issues.

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