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James Hyerczyk
E-mini Dow Jones Industrial Average

September E-mini Dow Jones Industrial Average futures tumbled on Friday, led lower by another plunge in technology stocks amid escalating tensions between the United States and China.

Among the Dow-components, Intel dropped more than 16% after the chipmaker offered disappointing guidance for the third quarter and delayed the release of its next-generation chips.

The blue chip index also closed lower for the week, snapping a three-week winning streak where gains were mostly generated by a rotation from high-flying technology stocks into less-volatile cyclical shares.

On Friday, September E-mini Dow Jones Industrial Average futures settled at 10460.75, down 87.50 or -0.84%.

Another Dow-component, American Express Co, fell after reporting an 85% slump in quarterly profit after setting aside nearly $628 million to cover potential defaults. Meanwhile, Verizon Communications Inc beat analyst profit and revenue estimates as the telecom saw strong demand due to stay-at-home mandates, sending shares higher.

Technology stocks, Apple and Microsoft also traded lower.

Daily September E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Friday when sellers took out the last main bottom at 26330. The main trend will change to up if buyers can take out the two main tops at 27057 and 27063.

The minor trend is also down. This confirms the shift in momentum and the change in trend. Thursday’s closing price reversal top is also a bearish chart pattern.

The short-term range is 27466 to 24409. Its retracement zone at 26298 to 25938 is potential support. This zone is also controlling the near-term direction of the market.

The major support zone is 25053 to 24484.


Short-Term Outlook

Friday’s price action suggests that the direction of the E-mini Dow on Monday is likely to be determined by trader reaction to the short-term Fibonacci level at 26298. We could see a technical bounce on the first test of this level, but if it fails then look for an acceleration to the downside with the next target the 50% level at 25938.

Buyers could come in again on a test of 25938, but the daily chart indicates there is plenty of room to the downside under this level with 25293 the next major target.

Look for a labored break as the market travels through 26298 to 25938. I don’t think investors are going to give up on the bull market easily.

Furthermore, if the market is headed lower, we expect to see a number of short-term rallies that help lead to a series of lower tops.

For a look at all of today’s economic events, check out our economic calendar.
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