E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Stocks Bounce Despite Earnings Warnings

September E-mini Dow Jones Industrial Average futures rose on Friday to begin the new month and quarter after the blue chip average finished a dismal first-half of the year. McDonald’s led the E-mini Dow higher with a 2.5% gain. Coca-Cola and Boeing also rose more than 2%.

Despite the better start to July, the market finished lower for the week as investors remained glued to warning signs from several companies that lowered their profit guidance. Investors are concerned that persistent inflation, rising interest rates and worries over a recession could continue to weigh on share prices.

On Friday, September E-mini Dow Jones Industrial Average futures settled at 31061, up 280 or +0.90%. The SPDR Dow Jones Industrial Average ETF (DIA) closed at $310.90, up $3.08 or +1.00%.

In economic news, the Institute for Supply Management said manufacturing activity in June was weaker than expected. Its index of national factory activity dropped to 53 for the month, the lowest reading since June 2020.

The ISM’s new orders index also fell to 49.2 from 55.1 – showing contraction for the first time since May 2020.

Short-Term Outlook

Trader reaction to the minor 50% level at 31137 is likely to determine the direction of the September E-mini Dow Jones Industrial Average early Monday. However, since the cash market is closed due to a U.S. bank holiday, don’t expect much movement.

Bullish Scenario

A sustained move over 31137 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the short-term 50% level at 31447.

Since the main trend is down, sellers are likely to come in on a test of 31447. Overtaking this level could trigger an acceleration into the resistance cluster at 31867 to 31874. This area stopped the rally on June 28.

Bearish Scenario

A sustained move under 31137 will signal the presence of sellers. This could lead to a retest of a minor pivot zone at 30753 to 30490, followed by the minor bottom at 30406.

Taking out 30406 will reaffirm the minor downtrend. This could also lead to an increase in downside momentum.