E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Reaction to 27339 Sets Tone into Close

December E-mini Dow Jones Industrial Average futures are trading nearly 800 points lower at the mid-session on Monday after investors threw in the towel on any hopes of a fiscal stimulus deal before the election and as a surge in coronavirus infections threatened to derail the economic recovery.

Optimism dimmed earlier today that the White House and Republicans could strike a stimulus deal with the Democrats before the election. White House chief of staff Mark Meadows and House Speaker Nancy Pelosi in separate interviews accused each other of moving the goalposts on stimulus talks. White House economic advisor Larry Kudlow also told CNBC’s “Squawk Box” that talks had slowed down, but noted they are still ongoing.

At 17:25 GMT, December E-mini Dow Jones Industrial Average futures are trading 27324, down 865 or -3.07%.

In stock news, Oracle and Microsoft are down 4.4% and 2.4%, respectively. However, stocks that are expected to benefit from another shutdown of the economy moved higher. They included Amazon, which climbed 0.4% and Zoom Video, which gained 3.2%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The main trend will change to down on a trade through 26407. A move through 28846 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the downside momentum. The minor trend was reaffirmed earlier today when sellers took out the Thursday’s minor bottom at 27896. The next potential minor bottom targets are 27109 and 27039.

The intermediate range is 29050 to 26407. Its retracement zone at 27729 to 28040 is new resistance.

The short-term range is 26407 to 28846. The Dow is currently trading on the weak side of this zone.

Short-Term Outlook

Based on the current price at 27324, the direction of the December Dow Jones Industrial Average into the close is likely to be determined by trader reaction to the short-term Fibonacci level at 27339.

Bearish Scenario

A sustained move under 27339 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the minor bottoms at 27109 and 27039. If the latter fails then look for the selling to possibly extend into the main 50% level at 26714.

Bullish Scenario

A sustained move over 27339 will signal the presence of buyers or that the selling has slowed down. If this creates enough upside momentum then look for the rally to possibly extend into a pair of 50% levels at 27627 and 27729.