James Hyerczyk
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E-mini Dow Jones Industrial Average

December E-mini Dow Jones Industrial Average futures are trading lower late Friday with the selling pressure led by a drop in  a number of tech heavyweights.  Earlier in the session, the blue chip Dow cash dropped as much as 500 points, putting it in a position to finish down about 6.4% for the week, its biggest loss since March.

At 19:05 GMT, December E-mini Dow Jones Industrial Average futures are trading 26107, down 450 or -1.69%. The 30-stock average is down 5% this month.

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A few of the catalysts encouraging sellers to trim their equity positions are rising coronavirus cases, the inability of politicians to agree to a fresh round of fiscal stimulus and uncertainty ahead of next week’s presidential election.

Shares of Apple, a component of the Dow, fell 5.5% after the tech giant reported a 20% decline in iPhone sales and failed to offer investors any guidance for the quarter ahead.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Wednesday when sellers took out the last main bottom at 26407. The downtrend was confirmed the last two days when sellers took out the previous lows.

The main trend will change to up on a trade through 28846. This is highly unlikely, but due to the prolonged move down in terms of price and time, the Dow is currently inside the window of time for a closing price reversal bottom. If confirmed, this move won’t change the main trend to up, but it could trigger the start of a 2 to 3 day counter-trend rally.

The main range is 24377 to 29050. Its retracement zone at 26714 to 26162 is controlling the near-term direction of the market. The Dow is currently straddling the lower or Fibonacci level of this range at 26162.


Short-Term Outlook

We’re going to be watching the price action at 26162 into the close on Friday. Trader reaction to his level could determine if the market is going to close higher or lower for the session.

Bullish Scenario

A sustained move over 26162 will indicate the presence of buyers. This won’t mean anything unless these buyers can overcome Thursday’s close at 26557. Finishing above this level will produce a potentially bullish closing price reversal bottom. This could extend the rally into the main 50% level at 26714. Overtaking this level could trigger an acceleration to the upside with 27400 the next upside target.

Bearish Scenario

A sustained move under the Fibonacci level at 26162 will signal the presence of sellers. This could lead to a test of the intraday low at 25953. If this fails then look for the selling to extend into the July 30 main bottom at 25777.

This is a potential trigger point for an acceleration to the downside with three potential main bottom targets lined up at 25210, 24716 and 24377.

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

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