E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Rate Hike Fears Encourage Profit-Taking

September E-mini Dow Jones Industrial Average futures edged higher on Thursday despite giving back nearly all of its earlier gains. Nonetheless, the blue chip average bucked the trend with the broader-based S&P 500 Index and NASDAQ-100 Index posting potentially bearish closing price reversal tops.

On Thursday, the September E-mini Dow Jones Industrial Average futures settled at 33304, up 44 or +0.13%. This was down from an intraday high of 33625. The SPDR Dow Jones Industrial Average ETF (DIA) finished at $333.76, up $0.56 or +0.17%.

Lower Inflation Won’t Stop the Fed Rate Hikes

Weighing on the stock market were worries that softening inflation would not lead to a let up in aggressive Federal Reserve rate hikes. Wednesday’s drop in the CPI and Thursday’s dip in the PPI raised bets in futures markets that the Fed would hike rates by 50 basis points in September instead of 75 basis points as was expected earlier in the week. However, Fed policymakers still insist they will tighten monetary policy until inflation pressures fully abate.

US Weekly Jobless Claims Edge Higher

In economic news, the number of Americans filing new claims for unemployment benefits rose for the second straight week, indicating further softening in the labor market despite still tight conditions as the Federal Reserve tries to slow demand to help tame inflation.

Dow Components Mixed:  Walt Disney Up, Johnson & Johnson Down

In earnings-driven news, Walt Disney jumped 4.7% as the media giant edged past rival Netflix Inc with 221 million streaming customers and announced it will increase prices for customers who want to watch Disney+ or Hulu without commercials.

Shares of Johnson & Johnson fell 2.07% after the company announced it will stop selling talc-based baby powder globally in 2023, more than two years after it ended U.S. sales of a product that drew thousands of consumer safety lawsuits.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 33625 will signal a resumption of the uptrend. A move through 34011 will reaffirm the uptrend. The main trend will change to down on a trade through 32342.

On the downside, potential support is a Fibonacci level at 33202, a minor pivot at 32984 and a 50% level at 32522.

Daily Swing Chart Technical Forecast

Trader reaction to the Fibonacci level at 33202 is likely to determine the direction of the September E-mini Dow Jones Industrial Average early Friday.

Bullish Scenario

A sustained move over 33202 will indicate the presence of buyers. If this creates enough upside momentum then look for a test of yesterday’s high at 33625. Taking out this level could trigger an intraday surge into the May 5 main top at 34011.

Bearish Scenario

A sustained move under 33202 will signal the presence of sellers. The first target is the minor pivot at 32984. If this level fails as support then look for the selling to extend into the 50% level at 32522.